LRD guides and handbook May 2015

Law at Work 2015

Chapter 2

Personal service companies

[ch 2: page 40]

Personal service companies (PSC) were originally intended to enable genuine freelancers and the self-employed to go into business limiting their business risk. However, there is evidence that an increasing number of individuals, including low paid workers, now have no choice but to contract for work through a PSC.

A PSC is a limited company with just one shareholder/director. The individual contracts with the organisation via the PSC — never directly. Using a PSC enables the organisation that benefits from the individual’s work to avoid employment responsibilities including national insurance, PAYE and all statutory employment rights, such as the National Minimum Wage, and holiday pay and protection. Someone who voluntarily contracts through a PSC is not protected from discrimination or harassment under the Equality Act 2010 (Halawi v WDFG UK Limited trading as World Duty Free UK [2014] EWCA Civ 1387).

See LRD’s guide for union reps, Casualisation at work, 2014.

www.lrdpublications.org.uk/publications.php?pub=BK&iss=1733