The question of employment status is receiving more and more publicity lately with Uber drivers, Pimlico Plumbers and Deliveroo riders claiming that they are workers while the companies are arguing that they are self-employed. So what is the difference?
Previously we had employees (on a contract of service) and self-employed (on a contract for services) and life was relatively simple, then along came the term “worker” and everything became a little less clear.
Employees. This is the simple master and servant relationship where the boss tells the employee where and when to work, the employee gets paid after deductions for PAYE and NI etc.. All of the responsibility for collecting tax and insurance rests with the employer and the employee has a raft of ’employment rights’ set out in the Employment Act 1996 and a myriad of other legislation. These rights include the right not to be unfairly dismissed, rights on pay, holidays, sickness, notice, guarantee payments etc., etc., the list goes on.
Self-employed. No master and servant relationship, the self-employed person must fend for himself, agree payments for work and invoice the ’employer’ for those payments, he has no employment rights, no sick pay and no entitlement to holiday pay. He would, of course, normally charge a higher price for his work to take account of these other issues. This person would be responsible for their own tax and insurance and would be registered with HMRC as self-employed or as a business in their own right. They should be able to pick and choose work and make a profit from their labours.
And then we have ‘Workers‘ the backbone of the so called gig economy. These are essentially self employed, perhaps sent by an agency or simply applied for a ‘job’, but are responsible for their own tax and insurance payments. They provide work ‘personally’ but are not considered to be employees as such, a grey area that is causing a raft of cases at the moment. Workers have some rights, for instance, they are entitled to receive the National Living or Minimum Wage, they are also entitled to paid annual leave, so it is important to understand the differences.
Uber drivers are workers, according to the recent employment tribunal case at least until the appeal, Pimlico Plumbers team are workers and that one has been to appeal. Deliveroo riders will, no doubt, be decided next.
Do you think that you may have ‘workers’ in your team, call us to get advice or you can try out the latest tool from HMRC which is available by clicking here
Call the Employment Law experts at Premier Legal on 0845 070 0505 or at our Nottingham Head Office on 0115 988 6211