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Self-employed or worker? Why it matters

Gary Smith was a self-employed contractor.  He worked for Pimlico Plumbers for 6 years. He was VAT registered.  He paid tax on a self-employed basis.

Following a heart attack in 2010, Gary wanted to reduce his hours.  The Company said “no” and his van taken away. He claimed he was dismissed.

The case asked what was Gary’s true employment status? Was he self-employed? Was he a “worker”? This is hugely important. “Workers” have rights.

But the contract said he was self-employed

You may have a contract that says they are self-employed.  A Tribunal wants to know what really happens.  It will look at whether there is:

• Mutual obligation
• Control
• A requirement for a personal service.

If there is, the Tribunal will then ask questions such as:

• Can a replacement be sent to do the work?
• Can they be told what work to do?
• Can they be moved from one task to another?
• Who decides how the work is done?
• Are they a skilled person or expert in their own field?
• Who decides what, when and how hours are worked?
• Who provides the tools?
• Who pays for supplies?
• Does the Company have to provide work?
• Does the worker have to do the work?

For 6 years, Gary Smith had only ever worked for Pimlico Plumbers. He drove a van with their livery on it.  He wore their uniform. When he tried to reduce his hours, his request was refused. The Court of Appeal decided in reality, he was a “worker”.

Employment Status

 Those who do work for you can be defined as:

• Self-employed
• Workers
• Employees

What is a “worker”?

A “worker” is someone who has:

• a contract/arrangement to perform work/services personally, for a reward;
• a limited right to send someone else to do the work;
• to do the work even if they don’t want to.
• The employer has to have work for them.
• They aren’t doing the work as part of their own limited company.

Employees are one category of “worker”.

Workers’ Employment Rights

Even though they may not be your “employee” all workers have the following rights:

• National Minimum Wage
• Not to have unlawful deductions taken from payments.
• Statutory holiday entitlement.
• Statutory rest breaks.
• Maximum 48 hours week, unless they opt out.
• Protection from discrimination.
• Protection from whistleblowing.
• Not to be treated less favourably if they work part-time.

Employees

Employees are one category of worker and have additional rights to:

• Statutory Sick Pay.
• Statutory Maternity, Paternity, Adoption and Shared Parental leave and pay.
• Notice.
• Protection against unfair dismissal.
• Right to request flexible working
• Time off for emergencies
• Statutory Redundancy Pay

 So why is this case so important?

It appears that Gary Smith and Pimlico Plumbers were once happy he was self-employed.  Now he will be entitled to holiday pay, National Minimum Wage and all the other benefits a “worker” has. \So will his colleagues.  That could be expensive.

Take a look at any self-employed contractors working with you. Are they truly self-employed? Is there:

• Mutual obligation
• Control
• A requirement for a personal service?

If there is, please contact me to discuss this further.