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Supreme Court ruling on self-employed contractors could turn business and lives upside down

This week, up and down the country, recruiters and self-employed contractors have been glued to their smartphones, radios and TV screens to discover the outcome of a court case that could have major ramifications on their business and livelihoods.

On Wednesday morning a group of Supreme Court judges ruled on the appeal case brought before them, which had questioned the UK’s outdated employment laws.

For those who haven’t heard about the case, it centre’s around whether a self-employed contractor, providing services to a company, should actually be treated as a “contractor”, or alternately is classed as a “worker”, and as such deserves similar employment rights to a PAYE employee.

In this case it was about self-employed plumber Gary Smith, who despite being paid very handsomely by Pimlico Plumbers, sued for employment rights, even though he signed a contract as a self-employed contractor.

Mr Smith won his original case, which Pimlico Plumbers appealed. This led to a subsequent hearing at the Supreme Court in February from which the judges retired to consider the judgement they gave today.
During his time with Pimlico, Mr Smith operated as self-employed and was VAT registered. He paid taxes on a self-employed basis and bought his own tools and materials, on which he reclaimed tax, also claiming for an office in his home. He chose when he wanted to work, and even employed his wife to carry out secretarial tasks for him and offset that as a business expense.

Today an employment tribunal concluded that Mr Smith was a worker, and as a worker he would be entitled to employment rights, such as holiday and sick pay.
Alan Lewis, employment partner at law firm Irwin Mitchell said, “The publicity around this case may encourage other ‘self-employed’ contractors to challenge their legal status,”

‘Crack down’

TUC General Secretary Frances O’Grady said the case had exposed “how widely sham self-employment has spread”. Ms O’Grady said the TUC wanted the government to act quickly to “crack down on bogus self-employment”.

At the moment it is up to an individual to prove that they are employed and entitled to workers’ rights. The TUC wants the “burden of proof” to be reversed so workers benefit from rights “unless the employer can show they are genuinely self-employed”.

“It’s time to end the Wild West in the gig economy,” said Ms O’Grady. In February the government promised to overhaul employment rights to improve conditions for millions of workers, including those in the gig economy. The proposed changes include stricter enforcement of holiday and sick pay rights, and higher fines for firms that breach contracts or mistreat staff. It is currently consulting on the proposals.

It is a response to last year’s Taylor Review into the gig economy , which concluded that all work in the UK’s economy should be “fair and decent.”

Author Matthew Taylor said that the combination of the Supreme Court decision and the government’s proposals to reduce the tax incentives for companies to employ freelancers, would “inevitably squeeze firms’ freelance budgets”.

“This is generally a good thing, especially if it leads to more people who are employees in all-but-name securing proper workplace rights,” he said.

The time to act is now…….. To find out how you can protect yours and your client’s business please do contact Steve McDermott at Originem

Call Originem: 0161 713 1730