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IR35 and employment status

Why employment status matters

Posted on: March 2nd, 2021 by Ginny Hallam

The Supreme Court’s judgement clearly sets out why Uber drivers are in fact workers and not self-employed. Below is our take on taxis and tests for employment status:

Decision –‘keeping it real’ has never been so important. The Court made it clear that the reality of the arrangement trumps what is written in any agreement or contract – if there’s inconsistency between the terms agreed and the practical arrangement, it’s the latter that the Court will consider.

Uber’s reality – Uber’s tight control over when and how work was done, the reliance on Uber to provide drivers with work, and drivers’ inability to influence Uber’s terms of work all indicated worker status.

Consequences – in Uber’s case all of this meant that instead of working with self-employed individuals (without rights to National Minimum Wage and holidays), Uber are responsible for ensuring that drivers have no less than statutory minimum pay, time off, and holiday, all at Uber’s cost.

Proactive steps – if you engage individuals on a self-employed basis, now (following this decision and the impending IR35 changes) is a great time to audit those arrangements and give yourself the opportunity to address any anomalies or potential risks. You’ll find more detail in our latest updates in this area.

Get in touch if you need support with consultants and understanding employment status.

 

This update is accurate on the date it was sent (2 March 2021), but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.

Part #2: Consultancy agreements – commercial protection

Posted on: February 11th, 2021 by Ginny Hallam

With IR35 changes fast-approaching, ensuring consultancy agreements are flexible, consistent with self-employed status, and protect key commercial exposure is vital. Here are our thoughts:

Equipment – set out whether the consultant can use your property in delivering the services and if so whether there will be a charge for doing so.

Invoicing – be clear when you expect to receive an invoice from the consultant, what the invoice should cover, and when payment should be made.

Expenses – provide an expenses policy which identifies whether the consultant can incur expenses on your behalf and if so the process for doing so.

Authority – stipulate whether or not the consultant can make binding decisions on your behalf, any limits on the decisions they can make, and the authority they need to secure.

Notice – set out the notice required from both yourselves and the consultant during the life of the contract (in particular make it clear that if you want to end the contract before the consultant starts working with you what notice will be due).

Insurance – make sure the consultant has got adequate insurance for the services they’re providing so you can rely on it in the event that things go wrong.

Get in touch if you’d like us to review your existing consultancy agreement terms, or you’d like access to our consultancy agreement template.

 

This update is accurate on the date it was sent (11 February 2021), but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.

Part #1: Consultancy agreements – protecting what matters most

Posted on: February 3rd, 2021 by Ginny Hallam

Engaging consultants is a great way to tap into talent without having to make a long-term commitment. But, are your consultancy agreements as good as your other commercial arrangements, or do they leave you vulnerable? 

Below are key protections you should include in your agreements:

Confidentiality and intellectual property – setting out clearly what belongs to your business avoids future arguments over contact lists, intellectual property, and confidential information. It also means that collateral, products, and services developed by your consultant for you are understood to belong to you. In addition, it clarifies that access to information on your systems and about your business must be protected and only used to further your interests.

Working with competitors (during and after the consultancy) – if you’re passionate that a consultant should avoid (during and after their work with you) engaging with your competitors or poaching your staff, you need to set that out in writing.

Protecting against employment – in our previous updates we covered why employment status matters (more information here). Make sure your agreement makes clear that the consultant recognises they are self-employed, along with an indemnity that if they suggest otherwise any liability you may suffer is covered by the consultant.

Get in touch if you’d like us to review your existing consultancy agreement terms, or you’d like access to our consultancy agreement template.

In part 2, we’ll be looking at how to handle further arrangements with your consultants such as insurance, invoicing, payment and more. 

 

This update is accurate on the date it was sent (03 February 2021), but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.

Understanding whether you ’employ’ consultants – five key steps

Posted on: January 27th, 2021 by Ginny Hallam

So, you know that employment status matters (more information here). But do you know whether your consultants are ’employed’ by you?

Here are five key steps to establishing whether you actually employ your consultants:

Personal service – review whether your consultants have to deliver the work personally, or whether they can deliver the work via a substitute. If they have to deliver the work personally, that is a factor indicating they may be an employee.

An obligation to do the work – consider whether your consultants can choose to turn down work that you offer to them. If they have to deliver work that is given to them, that is another factor indicating employment status.

Control – challenge yourself on how much control you have over the consultant. Do they use your equipment, invoice you for the work, rely on your insurance, look to you to authorise holidays (along with many other factors)? If so, each of these indicates employment status.

Documents – read carefully the arrangements that you’ve set out in writing. Do they reflect a self-employed arrangement and what truly happens in practice? Again, if not, you have further factors indicating employment status.

Advice – the test for employment status is multifactorial and complex. If you’re not confident as to the approach to take or the outcome that you’ve determined, consider taking advice. We’ve created a detailed checklist to get you on your way to determining the status of individuals you engage. Get in touch for advice or how to access the checklist.

In our next update, we’ll be considering the key terms you need to consider including / updating in your consultancy agreements to ensure you avoid claims of ’employee’ status. Get in touch for more information on accessing our consultancy agreement template. 

 

This update is accurate on the date it was sent (28 January 2021), but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.

Misguided beliefs about consultants’ status?

Posted on: January 20th, 2021 by Ginny Hallam

Even if you’re not caught by IR35, you may face issues dealing with the unexpected employment status of consultants you work with.

From claims for unfair dismissal, holiday pay, unpaid pension, and redundancy pay, below we explain why it helps to understand fully the commercial relationship you have with your consultants.

With the forthcoming changes to IR35, it’s a great time to understand your consultants’ status and whether there are any risks of continuing to deal with them as self-employed. As well as the fallout from any unpaid tax (currently the liability of the consultant) if you find that your consultant isn’t genuinely self-employed, ending their employment could mean you’re faced with allegations of unfair dismissal. In addition, claims for failure to pay holiday, pension contributions, and redundancy payments, are equally possible.

So, using the introduction of the changes to IR35 as context to audit relationships with your consultants and address anomalies (whether you’re caught by the IR35 changes or not) could be a good opportunity for tackling latent issues. Waiting to identify the status of the consultant until the point you end your agreement with them may well leave you exposed to a greater chance of litigation and risk.

In our next update we explore how you identify whether a consultant is, or isn’t, self-employed for employment law purposes. Get in touch if you need support with challenges around employment status in the meantime.

 

This update is accurate on the date it was sent (21 January 2021), but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.