What is the difference between being employed or self-employed? Well, in terms of your day to day job, probably not a lot. But, when it comes to your rights and benefits, this is a completely different story.
In 2017, there were some pretty big cases regarding employment status. The case of Pimlico Plumbers to be the most prominent. There were government reviews and changes in legislation, all of which made it to headline news. But, did this do anything to clear things up? How do you know whether you’re employed or self-employed?
Well, we asked industry experts EEBS to see what they had to say. Previously, they’ve commented on some pretty significant court cases. Deliveroo, Uber and Pimlico Plumbers being the most obvious. From this, they were able to conclude that one common-sense principle needs to be followed when it comes to employment status:
“If it waddles like a duck, quacks like a duck, has two wings and swims on a pond, then it’s probably a duck”.
Now, this probably sounds like a bunch of waffle, but, put in practice, it actually makes a lot of sense! EEBS described that, for example, if you supply cars and drivers to an individual in order to take them on a journey from A to B, then chances are, you’re a taxi driver. And no, you cannot claim that you’re an app provider.
Or, if you state that your plumbers are self-employed, but treat them like employees, then they are entitled to an employee’s benefits. Simple!
EEBS described though that when it comes to employment status, a contract must be clear. Specifically, that it reflects the intentions of the parties and the reality of the engagement. However, as we’ve seen in previous cases though, this is often easier said than done!
But, what are some of the key points that suggest an individual is an employee, not self-employed?
EEBS described: “If you are using a self-employed tradesman without a written contract, then chances are HMRC will likely deem that worker as an employee.”
“Also, if you supply the majority of the materials, plant and equipment to a worker, then chances are, they will also be seen as an employee.
“And, consequently, are able to claim for the benefits associated with it.”
“If you pay them an hourly/daily/weekly rate, and if the subcontractor cannot demonstrate that he can make a loss, as well as a profit, this indicates to HMRC that this individual is an employee, not self-employed.”
“Finally, if a subcontractor cannot demonstrate that he has an active portfolio of other clients then the HMRC are extremely likely to find that this tradesman is your employee.”
If you need advice on the status of your workers or have any other questions regarding CIS payroll compliance then contact Nick Pilgrim, MD of EEBS and CIS Payroll Specialist Nick@eebs.co.uk or call 01245 493832.
What do you think of this? Does this clear things up? If not, make sure you get into contact with Nick from EEBS using the information above.