worker vs sole trader

circlesofconfusion

Hi, I have recently started a job where the client/employer (I use this term loosely!) has insisted on classing me as a worker not a self employed person and on that basis have said that they are deducting holiday pay from my rate.  However they are not taxing me at source.  I've been told by them its standard practise even though I've never been in this situation before.  They have amended the invoice I sent in to reflect this.

I am providing my own hardware and software for the job, and I have always been working in my current capacity as either as a self employed person or a paye contractor...for the last 12 years and I've never come across something like this.  Unfortunately I didn't sign a contract before this job otherwise I would have queried it. 

Is it possible to do this, deduct holiday pay but not tax? I looked at the definition of worker on the gov website and it seems too vague.  Ignoring the categories about the contract it also says that workers work occasionally for the business in question, work under a supervisor, and can't send someone else in to do their work all of which are true but essentially all of these things are true when I'm a sole trader and I did specify that I was a sole trader.  Presumably this mean I am now going to get paid less than my original rate as the contract is quite short and I won't earn enough holiday to make up the difference.  Could someone give me advice on this?  And is there anything I can do about it? Is it a legal loophole? Thanks!

circlesofconfusion

I should probably add I'm very grateful I have a job during this time, but I feel completely blindsided by this and was charging that rate to allow for the fact I would have get various software licenses.

Sandtree

"Worker" isnt a legal status and so no its not normal. Presumably you arent in construction or one of the other minority industries that have different rules?

In theory in a B2B relationship it could be agreed that you'd be paid for X unworked days per year but that is starting to sound dangerously like an employee in which case it opens them up to possibly having to pay employers NI etc. 

circlesofconfusion

Thanks Sandtree, pretty certain I'm not in a minority industry (-definitely not in construction) but will check that out.  For now I'm resigned to the fact I have to accept it.

General_Grant

circlesofconfusion said:

Hi, I have recently started a job where the client/employer (I use this term loosely!) has insisted on classing me as a worker not a self employed person and on that basis have said that they are deducting holiday pay from my rate.  However they are not taxing me at source.  I've been told by them its standard practise even though I've never been in this situation before.  They have amended the invoice I sent in to reflect this.

I am providing my own hardware and software for the job, and I have always been working in my current capacity as either as a self employed person or a paye contractor...for the last 12 years and I've never come across something like this.  Unfortunately I didn't sign a contract before this job otherwise I would have queried it. 

Is it possible to do this, deduct holiday pay but not tax? I looked at the definition of worker on the gov website and it seems too vague.  Ignoring the categories about the contract it also says that workers work occasionally for the business in question, work under a supervisor, and can't send someone else in to do their work all of which are true but essentially all of these things are true when I'm a sole trader and I did specify that I was a sole trader.  Presumably this mean I am now going to get paid less than my original rate as the contract is quite short and I won't earn enough holiday to make up the difference.  Could someone give me advice on this?  And is there anything I can do about it? Is it a legal loophole? Thanks!

What exactly are they deducting - percentage, fixed amount?

If you are self-employed, do you not have your own terms of business (like how quickly they have to pay your invoices and what you will charge if they don't) which you present to businesses before you do work for them?  If not, get some and provide them - but you can be willing to negotiate.

If it's a short contract you could wait until you have completed and ask for all the pay they have withheld.  Or you could just ask them to pay holiday pay each time they pay for the worked time - presumably you are not working seven days a week.  I don't understand why you think you will miss out on what you would otherwise have been paid.  After all as a self-employed person you wouldn't have received holiday pay.  

Brynsam

Sandtree said:

"Worker" isnt a legal status and so no its not normal. Presumably you arent in construction or one of the other minority industries that have different rules?

Workers

The term ‘worker’ has a distinct legal meaning.

A worker is any individual who undertakes to do or perform personally any work or service for another party, whether under a contract of employment or any other contract. It does not matter if the contract is express or implied, verbal or in writing, provided the individual undertakes to perform the work or services personally, for an end-user who is not a client or customer. This normally excludes those who are self-employed. (This is based on section 230(3) of the Employment Rights Act 1996, but the definition of worker varies from statute to statute.)

Agency workers who are not employed by their agency and short-term casual workers are likely to be workers, unless they are found to be self-employed.

For example, a carpenter working for a building company on several occasions over the course of a year may be required to perform the work personally under the direction of the company, and could be paid on a ‘time worked’ basis, rather than by reference to the work she performed. She is, therefore, more likely to be a worker than an employee (see Q How do employers determine if an individual who already works for them is a ‘worker’?).

Workers are entitled to some rights and protections, including the national minimum wage, paid annual leave, rest breaks and protections for part time workers.

Source: https://www.cipd.co.uk/knowledge/fundamentals/emp-law/employees/status-questions

getmore4less

If they are deducting holiday the solution to get it paid is take holiday.