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Following the 2021 Uber ruling the Government has worked to produce guidance for employers when managing freelance/self-employed workers. Unfortunately, the guidance falls some way short of delivering clarity on critical aspects that employment lawyers, business owners and HR professionals had hoped for.
There are case examples that aim to provide context and assist in the determination of engagement by type, but these specific examples do not encompass the myriad of scenarios that may occur with contactors, freelancers, interim executives and consultants. Albeit an attempt to clarify the position they are likely to further confuse those who recognise some if not all of the example’s characteristics.
There is also a list of features that can help determine which of the three main categories an individual would fall into. Employee, Worker or Self-employed (see below – data courtesy of www.gov.uk)
Employee
- The individual is more likely to be an employee if they:
- have an employer, manager, or supervisor with extensive control over their workload and how their work should be done
- are required to work regularly unless they are on leave
- are required to do a minimum number of hours and expect to be paid for time worked
- can expect work to be consistently available – meaning the employer is required to provide work for the employee and the employee is required to perform work for the employer
- are employed to do the work themselves (provide a personal service) and only have a limited right to send someone else to do the work, that is send a substitute
- do not provide or use their own equipment
- are paid a wage and their financial risk is limited (for example the individual is paid by completing hours of work rather than by completing a task)
- are taxed as an employee meaning they are on PAYE (pay as you earn)
Worker
The individual is more likely to be a worker if they:
- have a substantial amount of freedom over where, when and how much they work and mostly do not have obligations to make themselves available for work, but should do work they’ve agreed to
- are under a degree of control from the employer when they are working (for example are subject to a recommended route or wear a uniform, rated by service users and subject to a penalty if they receive poor ratings, told to smile with their greeting)
- work for their employer(s) is often more casual, for example their work is less structured or not does not have regular guaranteed hours
- receive pay that is set by their employer, rather than negotiated by them
- employed to do the work themselves (provide a personal service) and only have a limited right or no effective right to send someone else to do the work i.e. send a substitute
- are an integral part of the business – such as assisting other members of a team or are subject to company disciplinary procedures
- do not tend to actively market their services as someone who regards themselves as self-employed to customers and clients
Self Employed
The individual is more likely to be self-employed if they:
- have significant freedom in when, where and how they work
- are responsible for the success or failure of their business, and can make a financial loss or a profit
- are able to send someone else to do the work without any restrictions (do not have to provide a personal service)
- can negotiate the price for the work – for example they are able to work for different clients and charge different fees
- use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
- are not integrated into the client’s business (for example no company email address, or not subject to disciplinary proceedings), and are able to turn down work if they do not like the fee or price
Where the guidance is being widely reported as inadequate is in clarifying the tax and employment status of individuals. Far from “tidying up” the rules the output from the Department of Business Energy and Industrial Strategy has unified many in their criticism in it failing to provide definitive, legislative support backing up the broader outlines as seen above.
If you have any queries or concerns relating to any of the articles above or a general enquiry regarding employment law please contact Robert Gibson on 0191 2328451 or e-mail robertgibson@samuelphillips.co.uk
Written by Robert Gibson, Senior Consultant - Employment Law
Robert is a Senior Consultant at Samuel Phillips and specialises in employment and business matters. He advises in relation to employment and shareholder disputes, including pensions and related issues.
