The ‘gig’ economy has been centre stage recently in the news and has caused confusion around individual’s employment and tax status.
Uber is adamant its drivers are NOT employees. However, an employment tribunal concluded they are, ‘workers’. Addison Lee also had a recent employment tribunal judgement, which came to the same conclusion.
These cases demonstrate the pitfalls of getting it wrong, on a large scale. The judgements of the tribunals have definitely provided Uber and Addison Lee with bucketloads of negative PR. They also have the administrative headache of changing their status, backdated rights to holiday pay and the National Living Wage. There’s also a strong chance that HMRC will collect backdated employer’s tax contributions for all of their newly defined workers.
How to establish status
In order to avoid the same problems as Uber and Addison Lee, employers are well advised to make a proactive and honest assessment of people they hire and ask the following:
- Does the individual work off-site?
- Are they using their own equipment?
- Is there a mutual obligation about you offering work and the individual having to accept work when offered?
- Does the individual regularly work for other companies?
- Can the individual send someone else of their choosing by way of a substitute, to carry out the work?
- Does the individual control how or when the work is completed?
If the answer to one or more of the above questions is ‘no’, the individual you’re hiring is probably not self-employed. If you treat them as self-employed, in the long-term you may very well come up against some difficult and costly issues.
We can help
If you need any advice or support on determining the employment status of individuals working for your company and what it means, get in touch with Helpful HR.