LRD guides and handbook May 2015

Law at Work 2015

Chapter 2

Self-employment

[ch 2: pages 37-38]

The genuinely self-employed are not workers or employees. They have very few employment rights. In particular, they are not entitled to the National Minimum Wage, sick pay or holiday pay, they must supply their own tools and equipment and are responsible for their own tax and national insurance contributions (NICs).

Self-employed workers are entitled only to the basic state pension, currently £115.95 per week (2015-16), which they receive as long as they have paid 30 years of NICs. The self-employed are also left out of the new pension auto-enrolment legislation, which UCATT says has created yet another spur for false self-employment.

Some self-employed workers will be protected under the employment provisions of the Equality Act 2010, where they are integrated into the organisation receiving their services and work under its control (Windle v Secretary of State for Justice [2014] UKEAT/0339/113/RN). The genuinely self-employed — those who operate an arms-length business on their own account — are not covered. Neither are those who opt to supply their services through an intermediary (Halawi v WDFG UK Limited trading as World Duty Free UK [2013] UKEAT 0166/13/0410) (see page 40).

The health and safety of self-employed workers will no longer be adequately protected following changes to the law by the last government, described by the TUC as one of the most dangerous pieces of health and safety deregulation ever enacted. Section 1 of the Deregulation Act 2015, if enacted, will remove health and safety protection from 4.2 million self-employed workers. Detailed regulations will be needed to flesh out this change, which is not currently in force.

To be genuinely self-employed, you should genuinely be doing business on your own account and providing services to your own clients and customers. HMRC has advice on its website as to what amounts to genuine self-employment.

Checklist: Are you really self-employed?

HMRC emphasises that employment status is not a matter of choice. It is a matter of law. Here are some of the factors likely to point to genuine self-employment:

• Do you provide your own equipment?

• Are you allowed to provide a substitute of your choice to do your work and do you ever do this?

• Do you provide helpers of your choice to work with you?

• Are you taking on financial or business risk?

• Do you gain more than just your wages/contractual bonus from the outcome of your work?

• Are you responsible for your own expenses?

• Do you expect to receive holiday pay or sick pay?

• Are you responsible for your own tax and National Insurance?

HMRC has devised an Employment Status Indicator Tool to help work out whether someone is genuinely self-employed which can be found on their website.

https://www.gov.uk/employment-status-indicator