The Supreme Court decided this week that a plumber, Gary Smith, who brought claims against Pimlico Plumbers, was a “worker” and was thus entitled to holiday pay and other basic worker’s rights. This was despite him being VAT registered and paying his taxes on a self-employed basis for the 6 years during which he was engaged by the company.
Mr Smith’s case started in 2011 and is the latest in a long line of employment law cases dealing with the question of employment status and gig economy workers.
Employment Status And Gig Economy Workers
Are You Self-Employed Or Employed?
While this may sound straightforward, it can sometimes be difficult to determine someone’s employment status, for example in regard to contractors, a person may think they are self-employed and yet find that aspects of their relationship with the employer mean they count as an employee to HM Revenue & Customs.
HM Revenue & Customs provides information on how to decide this and the tax implications, and it is worth considering this as HM Revenue & Customs can be strict on those who make an error. There can, for example, be major cost implications for employers if someone they consider to be a self-employed person is instead deemed to be an employee by HM Revenue & Customs, so it is worthwhile ensuring robust arrangements with staff.
The question of whether someone is self-employed or employed is not a new issue, and has long kept lawyers and the Courts busy. However, there is no doubt that this matter has become a much more public and debated issue, and that employers are increasingly finding themselves, and the way that they operate contracts for services, under scrutiny.
The distinction in whether someone is an employee, a worker or self-employed is an important one because some core legal principles only apply to employees, most particularly the rights relating to termination of employment. Workers are also covered by some important protections relating to the National Minimum Wage and working time, and of course the tax treatment of a person providing services depends on their status for tax purposes, as determined by HM Revenue & Customs.
Whilst Mr Smith’s case is not likely to open the floodgates and all other cases still have to be decided on their own specific facts, the Supreme Court is the highest appeal Court in this country and the decision is likely to weigh heavily on future applications involving similar situations. This case does bring again to the forefront the importance of establishing employment status and distinguishing between the rights afforded to different categories of the workforce.
How Nelsons Can Help
If you are unsure about the legal status of people that work for you and need advice as to whether the contracts of employment or contract for services that you have in place adequately reflect the working practices you have and protect your business sufficiently, then please contact Nelsons’ Employment Team on 0800 0241 976 or contact us via the online form.
We can advise on where we consider you may be at risk of a legal challenge in terms of employment status, review and update your existing documentation to ensure best practice and, of course, defend you if you are unlucky enough to be on the receiving end of a claim.