HMRC has announced it is to form a specialist team to examine working practices at organisations that use staff for freelance jobs to fill what amount to full-time roles.
Employers that persistently use office-based freelance workers to cover what would otherwise be full-time positions avoid offering individuals any of the associated benefits of full-time employment, such as sick pay, pensions and maternity leave, as well as avoiding employer national insurance contributions (NICs).
If an organisation is found by HMRC to be in breach of existing laws, it could be fined up to 100% of the tax owed. The Treasury said it is currently owed more than £300m in lost national insurance contributions.
It is unclear how widespread the practice is. The crackdown comes at a time when HMRC is taking a renewed interest in the use of ‘umbrella companies’ to pay staff, and other unusual working arrangements that circumvent NICs and other taxes.
Taxi-hailing app Uber and food delivery service Deliveroo are also legal cases over the status of their workers, who are currently classed as self-employed, with a tribunal decision on Uber’s case that has just come in as can be seen here:
Uber’s Employment Tribunal, on October 28th, ruled that two drivers who provide services to Uber are ‘workers’ within the meaning of the Employment Rights Act 1996.
This means they will be entitled to a limited number of employment rights . Amongst other rights, they will be entitled to:-
- 5.6 weeks’ paid annual leave each year
- a maximum 48 hour average working week, and rest breaks
- the national minimum wage (and the national living wage)
- protection of the whistleblowing legislation.
As they are not employees, they will not be entitled to:-
- the ability to claim unfair dismissal
- the right to a statutory redundancy payment
- the benefit of the implied term of trust and confidence
- the protection of TUPE, if Uber sells its business
I’m sure the verdict will be appealed and no doubt it is fact specific but be aware if you are taking on people under similar circumstances.
Prime minister Theresa May recently announced a review of workers’ rights, amid concerns that almost half a million workers in the UK could be wrongly classed as self-employed. The review will look at whether the national living wage is being undermined, and what changes in legislation may need to be implemented as a result.
The area of freelance jobs is not a black and white subject. It is a topic for interpretation and various tests. We have established a simple “checklist” to help you determine whether your arrangements are on the right side of law To avoid an unhelpful visit from HMRC or becoming involved in costly and stressful tribunal litigation please contact me for help and advice in this contentious area and to get the checklist by following the link here >>> or on 0203 640 7748.