An uber question of Employment Vs Self-Employment

At the end of last month, Uber lost a tribunal case against two of their drivers who wished to be entitled to employment benefits such as holiday pay, minimum wage and breaks. Whilst the tribunal decision initially only affects the two individuals who brought the claim, the knock-on effect – assuming Uber does not win any appeal – is potentially much more wide ranging, particularly given the forthcoming changes expected in the world of IR35.

IR35 legislation, backed up by the Employment Intermediary rules*, is the tax legislation which is used by HMRC to decide whether a self-employed person truly is self-employed or should be treated as employed.

From April 2017, new rules are expected affecting contractors working in the public sector, meaning that their employment status will be decided by either the public sector department that they are working for, or the agency that they are working through. A good example of this would be consultants advising on the implementation of digital services in HMRC, but may affect anyone working as a contractor in the public sector regardless of industry.

The Uber decision was not ultimately based on IR35 legislation, but employment law. However, individuals supplying their own labour and wishing to continue operating as either self-employed or through their own personal service companies, should look to ensure that they are truly self-employed by undertaking a review of their working practices and the contract(s) that they are working under. In addition, any businesses supplying workers who are not their own staff to the public sector should be aware of the forthcoming changes, although the final details are not yet know. We will communicate these once they have been announced.

Are you in either of these positions? Not sure if you’re truly self employed? Let us know.

* Employment Intermediaries rules – Broadly a business that takes on a contractor and then supplies that contractor’s labour to a third party (e.g. an agency) now needs to complete a quarterly return to HMRC stating the names of the individuals and the reasons why PAYE was not operated on them. If the individual is not a contractor, but employed by the agency, they are not reportable on the quarterly return.