‘Beware gig economy rulings, Hampshire lawyer urges bosses’

‘Beware gig economy rulings, Hampshire lawyer urges bosses’

A recent spate of high-profile legal cases could spell increasing trouble ahead for companies who treat regular workers as self-employed service providers, a Hampshire lawyer has warned.

Laurence Dunn, Director of DC Employment Solicitors, predicts “potentially very costly implications” in how the courts and tax authorities will now deal with ‘worker status’ disputes.

Addressing an audience of specialist tax accountants at Winchester Guildhall, Mr Dunn cited the much publicised cases of Uber taxi drivers, Pimlico Plumbers and CitySprint couriers, all of which were decided in the workers’ favour.

He is calling on employers and human resources departments to heed the “direction of travel” and carefully review their contractor arrangements to ensure peace of mind and avoid the risk of potentially costly claims.

Mr Dunn said: “Both the courts and HMRC will be increasingly sceptical about situations where companies seek to classify people as self-employed contractors when in reality they are workers or employees in all but name. The distinction is vitally important because a person’s status directly impacts on the hiring company’s responsibilities for paying tax, National Insurance Contributions and holiday pay. The individual may also have national minimum wage entitlement, the advantage of working time regulations and other workplace protections such as anti-discrimination legislation.”

Mr Dunn said the Uber and other ‘gig economy’ cases had all seen individuals successfully claim the rights of workers against companies that were seeking to present them as self-employed contractors. New legislation has also been announced, he added, that will bring more individuals within the scope of ‘worker’ or ’employee’ definitions.

“The direction of travel is clear,” he said. “There is far more likelihood now that individuals will be considered as employees or workers. This is a rapidly developing area of law with potentially very costly implications for many employers. More and more companies could find themselves vulnerable to a ruling that their contractors are actually workers or employees. If the employer gets it wrong, they may well be liable for arrears and penalties from HMRC as well as Employment Tribunal claims for arrears of holiday pay and minimum wage claims.”

Mr Dunn added: “The contractor relationship is an area which HMRC has deemed to have seen much tax avoidance. If someone is reclassified as an employee, then 13.8% of their earnings is payable by the employer for Employers’ National Insurance Contributions. That’s in addition to any national minimum wage uplift and holiday pay. Holiday pay is typically equivalent to about 12% of an individual’s earnings.”

Mr Dunn was speaking at a training event held jointly by the Chartered Institute of Taxation and the Association of Taxation Technicians.

Tom Lacey, chairman of the Institute’s Hampshire branch, said: “Laurence’s message was clear. Those in charge of workplaces must review their contractor arrangements to check and ensure they can be protected from worker status claims. It’s an issue that is becoming increasingly prominent for legal and tax reasons due to the rise of the gig economy and the high-profile court cases we’ve seen recently.”

Click here to see the full article: http://www.bizmag.co.uk/News/newsStory.aspx?storyID=2945&sectionID=3

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