The Workplace – The Self Employed Question – Paul Housego

If it looks like a duck and quacks like a duck and swims like a duck…writes Workplace contributor and labour lawyer of Beers Solicitors, Paul Housego as he examines the issue of Self Employment.

This recession is harder longer and deeper, in my view, than many publicly admit. Especially in the security industry there is pressure on already tight margins. Employees are by far the biggest overhead cost of any security company, so there is the temptation to try to escape some of the cost, the risk, and the regulation involved in employing people – by having work done by self-employed people. Many security companies do this, and make substantial savings – national insurance for a start, sick pay holiday pay and so on. And no risk of an unfair dismissal claim.

However this is fraught with danger. Not only are the Revenue and Customs on the lookout disguised employees (with the risk of back payments of tax and ni) but the Courts scrutinise such arrangements carefully. One case has found its way to the Supreme Court (the House of Lords as it was). Here, what competent employment lawyers have long advised was definitively set out as the law.

It doesn’t matter how expertly your contracts are drafted, nor how may devices are built in to make it look like self-employment, the Courts will look at what actually happens and that is how they decide if someone is self-employed, a worker, or employed.

In the case of Autoclenz Ltd -v- Belcher – the reference is [2011] UKSC 41- car valeters were held to be employees despite the very best efforts of clever drafting of contracts. It is a fact sensitive decision – hence the heading to this piece. There doesn’t have to be any intention to deceive anyone, and even if the employees were happy to have all the advantages of being self-employed that doesn’t stop them later claiming the advantages of being employed. This was hugely important to the employer – which is why they took it through 4 levels of Court, no doubt at vast expense, but lost.

Why does this matter? Well, not only is there the risk of unfair dismissal and redundancy claims, but also the time bomb of claims for holiday pay, backdated, and probably since the start of the employment, rolling on into the future. Working time regulation claims are also in prospect. Even if the employer wins the costs of defending and winning are not insignificant.

If you have a significant number of people in your organisation who you treat as self-employed, do make an appointment with your employment solicitor for a detailed and honest discussion about who they are, what they do and how they do it, and how to tackle the situation.