Does your charity contract for services from someone who is described as self-employed?
If so, then you may need to review your arrangements and check whether the individual is truly self-employed or you are treating them as a worker. If it is the latter, then they could have worker or even employment rights due to them, that your charity is not meeting.
The Pimlico Case
The Supreme Court (the highest court in the country) made a ruling in the Pimlico case last week that Mr Smith (a plumber), who was identified on paper as a ‘contractor’ was in fact treated by the company, Pimlico Plumbers, as a ‘worker’ under the Working Time Regulations. This was despite the fact that he had a contract for services, paid his own tax, prepared his own accounts, was VAT registered, could accept or reject jobs, negotiate with customers on price, and he worked unsupervised, provided his own tools and could swap jobs with other plumbers!
So why did the Supreme Court rule him to be a ‘worker’?
You might think that the above facts mean that Mr Smith is self-employed, but the Court also took the following into account: Mr Smith worked only for Pimlico Plumbers, he was required to work at least 40 hours per week, he wore a Pimlico Plumbers uniform and he drove a branded Pimlico Plumbers van, complete with a GPS tracker.
Some other important points that suggested he was a ‘worker’ were:
- He had to provide personal service to Pimlico to do the work (i.e. he had no right to send someone in his place). The Court found that even though in practice he swapped jobs with other plumbers, there wasn’t an express right to do so. It was more like swapping shifts than substituting services.
- The company exercised a level of control over him. He was integrated into the company rather than running his own business with Pimlico as the client or customer. Mr Smith was subordinate to Pimlico in a way that a self-employed contractor would not be.
Why is it so important to be clear about status?
Workers have more rights than self-employed people; employees have yet more rights. Workers are entitled to minimum wage, paid statutory holiday entitlement, and statutory sick pay. You can read more here via ACAS.
Mr Smith had brought various claims against Pimlico, and his entitlement to pursue those depended on whether he was classed in law as an employee, a worker, or as self-employed.
What does this mean for charities and community groups?
The law about worker/employer status has not changed, but this case means that it is very important to ensure that when contracting for services, Trustees and Managers of charities are clear that the person is genuinely self-employed and in business for themselves. Any hint to the contrary should be viewed with extreme caution. Merely referring to someone as ‘self-employed’ is not enough. Even if some factors point towards self-employed status, if the matter ever went before a tribunal, they may be outweighed by those pointing towards worker status. In short, each case will be decided on its facts! It’s the reality of the situation that counts not just what’s written on paper.
This decision should prompt charities to review their relationships with anyone who is working for the charity casually or as a ‘contractor’. It might be the case that you are inadvertently refusing them worker or employment rights and if that is the case they may be entitled to make a claim against the charity. It would be far more prudent to set up the appropriate employment structures and RVA are available to assist you with that.
If you have any queries about the issue of employment status, please contact our advice service on 01189 372273 or firstname.lastname@example.org.