Guardian investigation casts doubt on the use of Self-Employment

    Following a recent investigation by the Guardian newspaper it has been shown that some delivery drivers providing services to the parcel delivery business Hermes receive less than the National living wage for the hours they work.  The article goes on to criticise the use of self-employed workers in what it terms the “gig based” economy.
     
    We don’t doubt that there are a number of self-employed workers who are paid a set fee per work unit and who don’t achieve fees equivalent to the National Living Wage.  Equally we strongly advocate that self-employed individuals should be able to receive a fair level of income for the services they provide.  It doesn’t come as any surprise that there have been immediate calls for yet more action to restrict the use of self-employment on the grounds that individuals are being forced into accepting “false self-employment”. 
     
    What the article doesn’t fully address is the underlying legal basis of self-employment and the decades of case law that provides a sound set of rules for determining if self-employment actually exists.  The courts have determined that for an employment to exist the worker must be:
     
    • Obliged to provide their personal service;
    • Be subject to control over the manner of provision of their service;
    • Subject a mutuality of obligations between the two parties, and that
    • All other provisions of the contract should be consistent with employment.
     
    If any one of the first three factors can be shown to be absent then there cannot be an employer-employee relationship.
     
    The key to all of this is that there should be a written contract signed by both parties.  That contract must be a true reflection of the actual terms of the relationship as actually applied in practice.  If this isn’t the case then the courts, and by default HMRC, are free to set the contract aside and to determine employment status based entirely on the actual working practices and procedures.  It is also important that the individual both understands the terms of the agreement and has freedom to negotiate, accept or refuse the terms offered.
     
    Do your client’s contracts achieve this?  Perhaps this is a good time to review them and ensure they are not open to challenge.  Abbey+ can help both in reviewing and drafting contracts and if the worst happens in helping defend against challenges to self-employed status.