Things You Need To Know About Worker Status

The distinction between a contract for services (employment contract) and a contract of services (self-employed contract) has been the subject of much litigation over the years.

Some companies have sought to circumvent employment legislation by issuing contracts for services rather than to embrace the true employment relationship.

Other companies have sought to employ self-employed contractors in a genuine belief that this is the arrangement in practice between the parties.

Why Is It Important?

Firstly, an employer will have tax liabilities on behalf of its employees.  Where a self-employed contract is found by HMRC to have given rise to an employment relationship it will not matter that the worker has already accounted to HMRC for his or her full tax.  HMRC can require the company to pay again.

Secondly, an employer could find itself liable for National Minimum Wage rates and other employment related claims.

There have been a number of recent important decisions in this area affecting the gig economy.  However, the legal ratios in these cases can potentially affect other industries.

Any company that enters into self-employment agreements with the same individual regularly should take our advice on the status of these relationships.

For advice, assistance or for more information, please telephone our office on 01202 512227.