Self-employed but not really, now "fired"

JHolmsby

Hi

Hoping someone has some advice for me.

I worked for 5 years for a one-person business (who later became also a ltd company) and was encouraged from the very start to register self-employed though all my work came through this person and 99% of the work was done in his office. This person has even had clients pay me directly to help maintain the self-employed status, and also because it keeps him out of VAT.

Last week I stated that my hourly rate was to increase. This has met with a very hostile reaction and I've been told not to come to the office anymore and that there will be no more "commissions".

What do I do?

Many thanks,
John

heretolearn_2

No.

You've taken the benefits of being self employed (tax) for years. You also have to take the down side. You have no employment rights as you are not an employee.

From the firm's side, you are just a contractor/supplier. If you increase your rates and they want to go elsewhere, they can. Same as if the stationery supplier upped their prices, they can just start buying elsewhere.

marybelle01

I agree - you seem to be latterly attempting to use the "I wasn't really self-employed" argument because it no longer suits you; but it suited you to gain the benefits of being self-employed and you accepted the payments from other clients without a murmur at the time. If you were an employee then you also couldn't have just stated that your hourly rate was increasing - employees don't tell employers what their pay is. So you can't have it both ways. You increased your charges to the client, and they told you no. That's life.

So what you do is find other clients.

JHolmsby

You're substantially right, I feel. And to other clients I go.

But in asking for a written reference I have been refused. He will not provide one but says he will represent me "fairly" if I list him as a referee on my CV. Naturally I have no confidence in this. Do I push this harder or let it go?

floopnoodle

JHolmsby wrote: »

You're substantially right, I feel. And to other clients I go.

But in asking for a written reference I have been refused. He will not provide one but says he will represent me "fairly" if I list him as a referee on my CV. Naturally I have no confidence in this. Do I push this harder or let it go?

If you are going to new clients you don't need a CV, you need a portfolio and testimonials.

Contact your previous clients, the ones who paid you direct and start building up something to show future clients.

PlutoinCapricorn

You say that you were encouraged to register as self employed: this is not usually the best way to start freelance work. It seems likely that you have never needed to go into what being self employed actually involves, as you have been an employee in all but name. It does sound like the sort of arrangement that HMRC would not like. Were you getting at least 1/3 more than an employee doing the same work would have done?

Self employed people get work by personal recommendation, word of mouth and by marketing. Hourly rates do not always apply: work can be charged for on a job basis. CVs and standard references do not come into it, but client names and jobs done do.

Perhaps this will actually be a good boost to your career: it is not good to be reliant on one client, it is better to spread the load.

JHolmsby

Thank you for your replies everyone. At the time of beginning employment I had been out of work for many years and this was the only basis on which he would employ me (that is, if I registered self-employed). So there was an element of desperation on my part. And then for most of my time there I was only making enough to meet the bills, so was very careful not to rock the boat. The job consisted of going to the office, working there on what was initially only about 20 hrs a week but which built up to 33ish hours a week (I have records of my timekeeping going back a few years). It's pretty clear this is not a standard self-employed arrangement and therefore I'm sure you're right about HMRC, but would they dislike my role in this? I have paid class 2 NI contributions since I started there.

My ignorance has been a huge factor in this, I'm sorry to say. I played along without questioning or challenging from the beginning, and accept responsibility for this.

I will proceed to ask for a testimonial from this person. Reference was clearly the wrong word to have used.

PlutoinCapricorn

Getting the offer of work must have been a big relief: no wonder that you went along with the 'suggestion' to register as self employed.

HMRC would go after the 'employer' not you if they ever found regular payments to you over the long term.

I wonder how much your legitimate expenses come to: are they enough to reduce your tax liability substantially? I feel that you have been getting the worst of both worlds in that you don't get paid holidays and sick pay nor do you get the freedom and flexibility etc. that self employed people enjoy. You have not been in a position to make lots of contacts either.

I hope that you will stay with MSE: there are many useful posts by and for the self employed in the small business section.

JHolmsby

I am going to try to. The one very positive thing is that I have learned a huge amount in my time there and absorbed much of the knowledge that has made this person's business successful (this person is renowned within his field). Therefore I expect his competitors should be interested in me.

PlutoinCapricorn

Not everyone is suitable for 'real' self employment, but someone who takes responsibility and has a realistic view of things and a positive attitude the way you do may well have what it takes.

I do hope that you can put your hard-earned knowledge and experience to use for other clients; I guess that you have never had the sort of formal arrangement where contracts are signed and there may be clauses about not working for competitors during assignments or even for a short time afterwards.

Another way that self employed people get work is by having arrangements with each other to sub contract i.e. take over some work as a substitute if one person can't make it - too busy for example.

wantsajob

I always laugh when I see a job described as self employment. I know it just means the employer wants to get out of all the hassle and pay you a pittance.