Self-employed 'worker'

Mersey_2

The Court of Appeal ruled, in July, in Hospital Medical Group v Westwood, that the self-employed can be entitled to holiday pay, if you work at the same premises, use their facilities and so on.

But, how would the holiday pay be calculated as a cash sum?

InsideInsurance

http://www.direct.gov.uk/en/Employment/Employees/Timeoffandholidays/DG_10034642

Obviously employment rights and HMRC taxation considerations are two separate elements. Undoubtedly if you start claiming holiday pay then your more and more looking like a concealed employee and HMRC can apply tax in that manor irrespective of what your contract says

Notmyrealname

For the above I wouldn't. It sounds rather a strange ruling as it basically is saying you're an employee. Someone who is self employed should be factoring in holiday pay to the rate they are charging and putting aside money from every paid invoice to cover the period.

System

From http://www.hendersonchambers.co.uk/resources/articles/articles/ca-judgment-in-westwood-v-hospital-medical-group-handed-down-on-24-july-2012.

By judgment handed down on 24th July 2012, the CA held that that a hair transplant surgeon who was “clearly in business on his own account” and who contracted with HMG in the course of that business, was nevertheless a worker, and as a result was entitled to claim 6 years of holiday pay and claim unlawful deductions from wages.
The decision is likely to be of interest to businesses and public sector organisations which engage self-employed persons as part of their business model, and may now find themselves exposed to potentially costly claims.

I read that as the courts deciding that he was emloyed, which opens the gates for HMRC to do their bit

Uncertain

Notmyrealname wrote: »

Someone who is self employed should be factoring in holiday pay to the rate they are charging and putting aside money from every paid invoice to cover the period.

Indeed they should but that is not the point.

The rules regarding employment v. "sham" self employment get ever tighter. What the "employer" and "employee" agree to class it as has almost nothing to do with it.

If the situation is one that the law thinks should be treated as employment then the employee is entitled to all the benefits that would have come from employment such as paid holidays, unfair dismissal protection etc. The fact that these were allegedly factored in to the hourly rate is no defence.

It is also worth noting that there can be situations where HMRC decided it is an employment situation but an employment tribunal feels the person is self employed (or vica versa). Their decisions are not binding on each other!

System

But I can see HMRC taking the route that maximises their income.

Uncertain

!!!!!! wrote: »

But I can see HMRC taking the route that maximises their income.

They do to some extent and it is generally felt that the interactive guide on their website to help you decide your employment status is tilted towards being an employee.

However, there is little doubt that it is the employer they go after in these situations and not the self employed "employee"!

Mersey_2

Notmyrealname wrote: »

For the above I wouldn't. It sounds rather a strange ruling as it basically is saying you're an employee. Someone who is self employed should be factoring in holiday pay to the rate they are charging and putting aside money from every paid invoice to cover the period.

I took it to mean the self employed can be deemed to also be a 'worker' and so have some employment rights, such as holiday pay.

It wouldn't make them an employee - though I realise it's for HMRC to seek to recover NI contribs from the employer if this was the case.

Consultant Lawyers, Dentists and other professionals where the clients and premises are supplied by the company. A crucial point seems to be that the self-employed person didn't send a replacement to do his work.

InsideInsurance

Mersey wrote: »

I took it to mean the self employed can be deemed to also be a 'worker' and so have some employment rights, such as holiday pay.

It almost certainly wouldnt be "as well" but "instead".... though different agencies may have different tests but for any one situation there would only be one answer.

In my trade you wouldnt get any self employed "workers" anyway, they would always be through a Ltd or Umbrella because clients/ "employers" dont want the risk of being found to be liable for employers NI etc

I suspect the main result of this will be a widening of this approach

Uncertain

Mersey wrote: »

A crucial point seems to be that the self-employed person didn't send a replacement to do his work.

It can certainly be a significant factor on the list but it is not definitive on its own.

Uncertain

InsideInsurance wrote: »

In my trade you wouldnt get any self employed "workers" anyway, they would always be through a Ltd or Umbrella because clients/ "employers" dont want the risk of being found to be liable for employers NI etc

The last legal advice I had on this issue was that a one man Ltd company may not be sufficient.

A properly set up "umbrella" still seems to be OK but for how long?