When is a self-employed person a ‘worker’?

When they’re employed by Pimlico as a self employed plumber apparently.

When they’re employed by Pimlico as a self employed plumber apparently. This is an important case, hot on the heels of the Uber taxi case (which is being appealed incidentally), as there are tax and national insurance implications for both the workers in question and Pimlico. It could also have implications for other businesses, large and small who employ ‘self employed’ contractors.

This particular case turned in particular on the fact that Pimlico engaged the ‘contractors’ to perform the services personally and did not allow them an ‘unfettered right of substitution’ i.e. the ability to send another person in place of themselves to do the work they were engaged by Pimlico to do.

Pimlico contracts in common with very many ‘self employed’ contracts contain a substitution clause that read something like “You are engaged personally to perform the services, but you may if you wish provide a substitute to perform the services in your place providing the Company has given prior approval for that person to perform services on its behalf in the performance of this contract.

The last italicised part is the bit the tribunal took issue with – because this is not an unfettered right of substitution. This finding was despite the fact that the claimant in this case was paid by invoice, was free to choose his own working hours (subject to a weekly minimum) and provided his own tools, nor was the fact that Pimlico was under no obligation to provide work if none was available seen to be sufficient enough to change the tribunal’s view.

It is very clear that the net is closing in on ‘self employed’ workers and employers should take a careful look at their own arrangements and the wording of self employed contracts.

While a simple change to wording may help it won’t be the whole answer – tribunals (and HMRC) will look at the practice of what actually happens – if a clause says ‘you may send a substitute’ it won’t count for much if in practice this doesn’t and wouldn’t happen.

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