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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 50161
Experience:  Qualified Employment Solicitor
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We run a security and cleaning business and used a person who

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We run a security and cleaning business and used a person who is self employed to provide ground patrol and lock up of a clients site.
We did not have a formal contract and he chose shift patterns (fairly regular but not consistent) to cover the duty. We received an invoice per shift from his company.
The person performing this role was let go for performance issues (sleeping on the job) etc but again this was done informally.
Since then we have received a letter from HMRC stating that he was an employee rather than self employed and the information provided by him suggests that the shift (and hours worked) were under the minimum wage per hour. They are now claiming that we need to reimburse the difference for the time he served with us (2 years).
We are planning to respond to the claim that he was employed rather than self employed to HMRC using the tax rules in this area. However, we are concerned that if they hold the assumption that he was an employee that this may open a can of worms from a legal perspective...e.g. what other rights would he have had as an employee that he may pursue separately through a legal route.
Any assistance/advice on the possible ramifications on this would be welcome so we can measure the effort we put to challenging the HMRC decision.
Hello, my name is ***** ***** it is my pleasure to assist you with your question today. Have you taken the employment status test to try and work out what his status was?
Customer: replied 2 years ago.

Yes but some of the questions are open to interpretation. When we answered to the best of our ability he came up as employed but we could challenge some of the detail around this...just realised my first question wasn't that clear HMRC are claiming that he is an employee when we were treating him as self employed

A person's legal rights in the workplace will mainly depend on their employment status. However, establishing your employment status is not an easy task and there is no single test that can be used. It is usually irrelevant what a person is labelled as by their employer because their status would depend on the overall employment relationship, not on what they referred as.
Following years of case law, a number of established factors have generally been accepted as a reasonably accurate way of establishing whether someone is an employee or self employed. The courts would still use some of these to get an overall picture of the employment relationship and determine the person's employment status.
The test you took would provide an indication but it is just that – to formally establish one’s status you would really need to challenge this in court or an employment tribunal as they would have the final say.
What is important to note is that HMRC may regard someone as self-employed for tax purposes, however an employment tribunal or court may still make a decision that they are a worker or employee for employment rights purposes.
So the mere fact that HMRC may have decided he is an employee in relation to tax would not automatically open you up to any further claims for any other employment rights he believes he has. Should he decide to challenge this in court then the potential ramifications of him being found to be an employee could include:
• Duty to pay the minimum wage
• Paid holidays (28 days a year for a full time employee)
• Protection against unfair dismissal (only if he has a minimum of 2 years’ service). Also he only has 3 months from the date of dismissal to challenge it.
All of this depends on him firstly challenging his status in court, then being successful and also being in time to make the claims. So there are many ‘ifs’ which may not necessarily materialise.
I trust this has answered your query. I would be grateful if you could please take a second to leave a positive rating (selecting 3, 4 or 5 starts at the top of the page). If for any reason you are unhappy with my response or if you need me to clarify anything before you go - please get back to me on here and I will assist further as best as I can. Thank you
Customer: replied 2 years ago.

That's great....just one last thing do you have a link I could look at legal differentiation between employed and self employed should he take it through a tribunal? I take it from your answer that this would be more in depth than the HMRC one.

Thanks again

Well the issue is that there is no formal test that can be used for this – the test you took online actually incorporates the most common factors. There is a lot of case law and it is really a mixture of historic cases that would determine this. Some more information on this here: If your original question has been answered I would be grateful if you could please quickly rate my answer by selecting 3, 4 or 5 starts at the top of the page - it only takes a second to do and is an important part of our process. I can still answer follow up questions afterwards if needed. Thank you
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