If you have members of staff who work on a self-employed contractor basis, a recent decision of the Employment Tribunal may have consequences for your business.
It means that, in certain circumstances and despite the worker still currently being classified as self-employed for tax purposes, businesses must ensure that some contractors do not breach working time rules and that they are paid the national minimum wage as well as holiday pay.
This may apply even if they contract to other businesses.
In the Uber case, an application was made by two drivers who use the app requesting that the Tribunal give a ruling as to whether they were “workers” for the purposes of the rules on the maximum working hours, the minimum wage and holiday pay. It is important to note that these rules apply to all workers and not just employees.
The Tribunal held that Uber exercise control over the drivers and they were deemed to be “self- employed workers”. A distinction was made between them and “self-employed businesses”.
As an example, to highlight the differences, consider a joiner. Joiner A has a van with his contact details on the side. He has a listing online as a business and he controls his day to day activities including which jobs he takes on and what he charges. He may work for a company quite regularly, but if he has a better paying job available he can take that without consequence.
Joiner B is also self-employed, but he drives a van provided to him by a building company he gets almost all of his work from and does not advertise his services to the public. He does some jobs in his own capacity at evenings and weekends. He is allocated work by the company, but would feel uncomfortable in refusing it in favour of a better paying job elsewhere for fear of the van and his main source of income being removed.
The decision in the Uber case confirmed that Joiner A would be considered a self-employed business person, but Joiner B would be a self-employed worker entitled to protection under the minimum wage, working time and holiday rules.
It is important for any business who has self-employed contractors within their business to assess whether they would be classed as self-employed business people or self-employed workers. The key aspect is control. If the business exerts control over their day to day activities they are likely to be a worker, although it is a little more complicated than that.
If you believe you have self-employed workers within your business you must ensure they are paid an equivalent of the minimum wage and pro rata holiday pay while ensuring they do not work more than the maximum number of hours per week without opting out of the Working Time Directive.