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Employment status evolves

Graham Buckell explores the changing nature of employment status and the importance of ensuring all advice on employment arrangements takes into account the most recent changes.

"The last few months have seen a series of court decisions regarding employment status.

We have had the Supreme Court decision in Pimlico Plumbers Ltd v Smith which held that a “self-employed” plumber was a worker with entitlement to various employment rights.

A short while later an employment tribunal in Leeds ruled that a group of 65 “self-employed” couriers for Hermes should be treated as workers. This will affect over 14,000 other Hermes couriers.

On the IR35 front results have been mixed. The most high profile was Christa Ackroyd Media Ltd affecting a well known BBC presenter, Christa Ackroyd, with a win for HMRC. There are apparently some 100 similar appeals ongoing.

On the other hand the taxpayer won in MDCM Ltd v HMRC and Jensal Software Limited v HMRC.

There is clearly a contrast between the gig economy cases where businesses are pushing large numbers of individuals into self-employed status and the IR35 cases which focus on single highly skilled individuals.

6 April 2014 saw the introduction of rules to tighten where IR35 might apply in cases where workers are supplied via agencies. These rules eliminated, for example, the traditional get out of having a substitution clause in the contract.

6 April 2017 saw the introduction of rules similar to that for agency workers to contractors working for the public sector. HMRC launched a consultation this May concerning extending these rules to the private sector.

A particular concern with the new approach is to push the responsibility on whether to apply it back to the end user (in contrast to the agency rules which imposed the obligation on the agency). Interestingly this was the original proposal when IR35 was first introduced way back in 1999 but was ditched after protests from big business. Some engagers are taking the “easy” option of assuming that PAYE applies regardless of actual circumstances. Not surprisingly many contractors object to this approach and are walking away from such contracts, leaving the public sector undermanned in its projects. Whether the same problem will arise if the rules are extended to the private sector remains to be seen.

The conclusion is that this is a constantly changing area and that one must not assume that arrangements once considered safe remain so today."

If you would like to speak with Graham regarding employment status, please do email grahamb@batesweston.co.uk or call 01332 365855.