– Richard Voisey, Nwes Business Consultant
For as long as I have been involved in the enterprise industry, I have regularly been asked the question of when am I employed and when am I self-employed? Over the years, some industries have come under the microscope for treating people as self-employed rather than employed to avoid employee costs, taxi companies taking on drivers and double-glazing firms requiring sales people and two examples that spring to mind.
My simple interpretation has been based on the following questions; Is the individual free to trade with other organisations? Does the individual advertise their services freely in the open market? Has and does the individual have more than one customer? Is the individual not constrained by a contract which governs responsibilities, days and hours of work, activity as though they are employed as a worker?
According to news reports, a plumber has won a successful legal battle for working rights in a Supreme Court ruling which is expected to have a massive knock on effect for freelance and contracted workers.
Gary Smith had worked solely for Pimlico Plumbers for six years whilst being registered as a Sole Trader and therefore paying self-employed tax plus being VAT-registered, he was still entitled to workers’ rights. As a worker Gary would be entitled to employment rights, such as holiday and sick pay and as a result the ruling will be closely read by others in a similar position.
According to HMRC Someone is probably self-employed and shouldn’t be paid through PAYE if most of the following are true:
- they’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
- they can decide what work they do and when, where or how to do it
- they can hire someone else to do the work
- they’re responsible for fixing any unsatisfactory work in their own time
- their employer agrees a fixed price for their work – it doesn’t depend on how long the job takes to finish
- they use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
- they can work for more than one client
HMRC provides guidance with include a tool to determine whether someone is employed, or self-employed. If you have any doubt, contact HMRC directly.
To find out more about starting or running for your business, call 0845 609 9991 or visit www.nwes.org.uk