Employed or Self-Employed ?
THE RUMBLINGS of discontent regarding the employment status of many people working on a self-employed basis seems to be gathering pace yet again.
Tax and employment specialists are predicting that HM Revenue & Customs (HMRC) will be clamping down on people claiming self-employed status, when in fact the reality of their position is that of an employee. In what may become a landmark case, a recent Tax Appeals Tribunal ruled that HMRC was right in deciding that the 1,700 'team leaders' at Weight Watchers Centres were working as employees rather than working on a self-employed basis. This ruling could cost Weight Watchers over £23million and although they are likely to appeal, the potential legal costs will doubtless give their financial director a few sleepless nights.
In order to ensure your workforce has the correct employment status, there are some basic principles that can be applied, which the Tribunal took into account in this case. Firstly, is the individual required to provide their services personally? In the Weight Watchers case the meeting leaders only had a right to be paid if they personally took the meeting. Although it was possible for a substitute to take a meeting in their place, the substitute was paid directly by Weight Watchers. The requirement for personal service points toward employed status, rather than self-employed.
Secondly, the degree of control over the individual by the client/employer affects status. By dictating the the way meetings were run, the obligation to sell products at set prices and restrictions on participation in other weight maintenance programmes again indicate an employed status.
If you think this could affect you, please get in touch with us at the email address below for an assessment of your situation. (April 2010)
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