Bridge HR articles
15 Feb Beware employees in self-employed contractor clothing: are your self-employed contractors / casual staff really employees? What could that mean for your business?
Clients are increasingly using zero hour/ self-employed contracts which seems consistent with statistics suggesting that there is a national increase in people engaged under these type of working arrangements – currently in excess of one million (c. 3% of people currently working in the UK).
Whilst the benefits of these working arrangements are tangible in terms of the flexibility they offer both organisations and individual workers, businesses must remain wary of inadvertently creating an employment relationship instead, leading to a complex list of potential issues down the line – including rights to claim unfair dismissal and compensation, backdated PAYE liability and rights to redundancy pay too.
It often pays for a disgruntled worker to claim they are in fact an employee and in our experience, when things go wrong, they often do! They can then cause merry hell by raising tribunal claims and reporting businesses to HMRC.
An Employment Tribunal asked to determine whether a self-employed worker is, in fact, an employee will look at what is actually happening in that relationship and not simply what the contract says.
The paper is worth very little if the actual working arrangements ticks certain boxes.
The same applies to HMRC’s interpretation of arrangements from a tax and NI perspective – they too look behind the contract to establish if this is an ‘employee’ relationship or not.
Organisations must therefore be very careful to ensure that regular work arrangements do not create an expectation that work will be provided at regular intervals, overriding the self-employed nature of a true self-employed contractor.
They must also be alert to excessive control being exerted over the self-employed, to the extent that the flexible “don’t have to give work/don’t have to accept work” can be undermined.
These are just a couple of examples – getting this wrong can be incredibly costly for employers – we have seen this first hand with backdated employee claims being claimed.
Regular reviews of the actual practical management of working arrangements of any self-employed contractors you have engaged is essential to minimise exposure here, as is ensuring that the right documentation is in place to support the self-employed nature of these arrangements and that the system for engaging them reflects the lower control, arms-length nature of a self-employed contract – that all keeps organisations on the right track to successfully engaging true self-employed workers.
If you have concerns about the actual status of any workers engaged by your organisation or you want to ensure that you have in place contracts that are reflective of what is going on in your workplace and to minimise your potential liability here, get in touch with the team on: 01904 360 295.
Posted by Lee Stephens
Lee Stephens heads up the team with the help of his co-Directors, Lee has practiced as a specialist employment Solicitor for almost 20 years now, formerly as a Partner with a leading UK law firm Lee Stephens advises SME’s to PLCs and he has a wealth of experience in successfully helping businesses with all aspects of employment law from the day to day to complex reorganizations, TUPE, senior executive removals and disputes through to Tribunal too. KEY AREAS OF WORK Lee has significant experience on:- Post termination and confidentiality breaches and injunctive relief work TUPE transfers and consultations; Senior executive disputes and removals Re-organizations and restructures in various sectors from healthcare, manufacturing to independent schools Agency and self-employed contracts and related claims Employment Tribunal defence and claims Lee has spoken on invitation on various aspects of employment law for various groups across the UK. Using his knowledge and experience Lee solves problems for clients and provides excellent service too. Lee also undertakes his own advocacy and delivers management training workshops and he has particular experience working with clients within the Private School, Veterinary, Care, Recruitment and Production, Logistics & Manufacturing sectors.