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Self Employed Workers
Are your Self Employed Workers actually your Employees?
Many businesses enter into ‘Self Employed’ worker agreements with staff to seemingly avoid the obligations and responsibilities associated with employing people directly. Many cases have come to light over the past few years where businesses have been caught out in using this approach, but all too often employers enter into what they see as ‘water tight’ contracts expressing in distinct terms that their workers are indeed Self Employed; believing that this alone will keep the wolves from the door. However, as a very recent case shows; this in itself is not adequate justification for Self Employed status.
In a recent case, an employer had used two male workers who had been ‘Self Employed’ for a period of time with them. This status was assumed due to a distinct contract between the employer and the workers to state that they were not employees and that they were responsible for their own tax contributions.
After a period of time, the employer decided to take the two men on as employees of the company. However, before they had been officially employed for a year, the employer dismissed them.
You may well think – what’s the problem? They were within the period of minimum service for this to be acceptable. However, you would be wrong. The two men took the employer to Employment Tribunal where they successfully claimed unfair dismissal. Their argument was that during their contract as Self Employed workers, they were in essence working as employees of the company and this period of time would also count towards their length of service.
The employer defended itself by claiming that, because the men had not paid employees’ tax during that period, they had rendered any perceived employment contract for that time illegal.
The employer appealed to the Employment Appeal Tribunal who also upheld the unfair dismissal claim, stating that although the men had not paid the tax required, it did not on its own override the status of their relationship with the employer.
Even at a further appeal through the Court of Appeal, the employer’s pleas that the non payment of tax made the perceived employment contract illegal were not upheld. The appeal was dismissed.
Conclusion
In reality, for employers this is yet another example of how easy it can be for an employee to acquire length of service which may make them eligible for a Tribunal claim. If you have an employee who has worked for you previously in any capacity, then you need to make sure what will count towards their length of service. If for any reason you dismiss them, this time may have a bearing on the way that their position is terminated, or the rights that the employee may have to bring a Tribunal claim if the termination is not done correctly.
If any of this article if ringing any alarm bells or if you want to review or check any employee’s statutory or contractual rights, then just get in touch. We will be happy to assist you further – 0800 023 2048