A person is self-employed if they run their business for themselves and take complete responsibility for its success or failure.
Self-employed people do not have the employment rights and responsibilities of employees as they are their own employer. This negates the necessity for a contract of employment between two separate parties (employee and employer) and means that a self-employed person must decide for themselves things like how much to charge and the amount of holiday they should take.
Being self-employed, therefore, means forfeiting the right to:
• statutory sick pay
• maternity, adoption and paternity leave and pay
• the right not to be unfairly dismissed
• statutory redundancy pay
• the National Minimum Wage
• rest breaks, paid holiday and limits on night work
• protection against unauthorised deductions from pay
Determining Between ‘Self-Employed’ and ‘Employee’ or ‘Worker’
There is no one factor that completely determines an individual’s employment status and it can be disputed. Disputes usually arise when there is confusion between the relationship between an individual and the person or business for whom they are undertaking work. An example of this is an individual being denied holiday pay by an employer because they say that the individual is self-employed.
Often disputes can be resolved between the parties themselves. Employees and workers would typically have the right to lodge a grievance under the company’s Grievance Procedure as a more formal mechanism.
Failing that, you may need to take the matter to ACAS under early conciliation prior to lodging an Employment Tribunal claim. Your employment status would define whether early conciliation is available to you or not, but you should not delay because the deadlines to start this process are normally limited to three months from the date of the act giving rise to your issue.
Finally, if early conciliation fails then your last resort is to submit a claim to the Employment Tribunal. The Employment Tribunal has the power to examine the evidence of your working relationship and determine what category your particular circumstances fall into.
Your written contract (if there is one) is a good source of information and highly influential, but it is not necessarily the end of the story. We need to examine with you the practical reality of the working arrangements too. This would include exploring key aspects such as:
- Mutuality of obligation - This is whether you have the right to be offered work at all, and if so, whether you are already obliged to accept it. Contractual wording such as “you will be paid £20,000 per annum and your working hours are Monday to Friday, 9am to 5pm with a one hour lunch break” would indicate this.
- Contractual controls - This would be whatever is in place on how the work is done. For example, a self-employed decorator would be unlikely to have any degree of contractual constraint on when and how they work. More likely, the terms of that contract would be to produce a finished product of acceptable standard within an agreed time frame at an agreed price.
- The complete picture of the working relationship - This would include aspects such as:
- who pays the tax
- who is liable for insurance
- whether there is any other financial risks to you
- who provides and maintains the equipment
- whether you need to follow the company rules and policies
- whether your performance / misconduct is managed
- whether you are integrated into the employed workforce;
- how the relationship can be terminated.
There is no one defining feature which determines the correct category of employment status. It must be looked at as a whole and often there are differing versions of what the working arrangements really are. If you need legal advice on your employment status and rights, then contact us here, send us an email to firstname.lastname@example.org or give our friendly employment experts a call on 029 2043 7484.
Employment Rights for the Self-Employed
Being genuinely self-employed does not mean forfeiting all rights in the workplace.
Those who are self-employed will still have protection in place for their health and safety, as well as against discrimination. They may also have specific rights and responsibilities set out by the terms of any contracts that they have with their clients.
Health and Safety
It is a duty under the Health and Safety at Work etc. Act 1974 for self-employed people to assess health and safety risks to themselves and others they work with. This is to protect them and others from workplace dangers.
In order to do this, they must understand what in their day-to-day business practice might cause harm, and try to prevent this harm occurring by putting into place appropriate and sensible control measures.
For more information on how to ensure that your business complies with health and safety law, please see this guide at Health and Safety Executive.
Contracts with Clients
Some self-employed people sign contracts with their clients and these will contain details of rights and responsibilities. It is unlikely that this contract will focus on employee rights, and will usually focus on the specific work expected of them.
Alternatives to Basic Employment Rights for the Self-Employed
Whilst a self-employed person will not be subject to the rights listed above, they will have access to things like a state pension, welfare benefits, and an employment and support allowance from the Department of Work and Pensions (DWP) if they fall ill.
Self-employed people have a right to a state pension if they have paid the necessary national insurance contributions.
Self-employed people on low incomes have the right to receive tax credits and certain welfare benefits. Making this type of claim can be complex and usually requires the help of HMRC, the DWP or the Citizens Advice Bureau.
Self-employed pregnant women might be entitled to Maternity Allowance (MA) if they have been self-employed for at least 26 weeks out of the 66 weeks up to and including the week before the week their baby is due. They must also earn at least £30 a week.
Whilst the self-employed can’t receive statutory sick pay when they fall ill, they may be able to claim employment and support allowance from the DWP.
This will offer them financial support and personalised help to work if possible, and will involve a Work Capability Assessment to see to what extent their illness affects their ability to work.
Protection for the Self-Employed
Those who are self-employed should consider what will happen should they become unable to work due to sickness or injury.
Personal insurance such as income protection can replace part of a self-employed person’s income if they can’t work because they are ill or disabled, and critical illness cover will pay out if a self-employed person gets a specific medical condition or injury listed on their policy.
Talk to experienced Employment Solicitors
If your employment status is in dispute, then please get in touch. Here at Howells we have the knowledge, skills and experience to fight your corner.
Our sensitive and experienced team can help you get your voice heard. Call us on 0808 178 2773 or email us at email@example.com today.