skip to navigationskip to main content
Subscribe to our newsletter today

Please read our before signing up

Reality of Self-Employed Contracts

Newsletter issue - November 2011.

A recent case heard in the highest UK court (the Supreme Court) may affect whether workers are defined as employees, and hence whether they are entitled to employee rights and whether the employer has to pay them under PAYE. The case was called Autoclenz Ltd v Belcher.

Autoclenz Ltd required its workers to be self-employed contractors and issued contracts to those workers, which they were required to sign in order to be offered any further work by the company. The company provided the workers with all the tools and materials they needed, but deducted a 5% charge for use of those tools and materials from the invoices it prepared on behalf of its 'self-employed' workers.

The workers were paid so badly that they made claims to the employment tribunal to be paid the national minimum wage and holiday pay. The tribunal agreed the workers were employees in spite of the contracts they were required to sign. When the case reached the Supreme Court it found that the written contracts were a sham and did not reflect the reality of the relationship between the workers and the company.

This case shows that the definition of a sham contract is very wide. If the contract you have with your self-employed workers doesn't reflect the true agreement between you and those workers, the written contract could be ignored by the Taxman and any court.

To ensure your self-employed contractors are not treated as your employees, check that all of the following documents truly represent the reality on the ground:

  • Written contract with the worker, and with any agency that provided the worker;
  • Security clearance and passes (different for contractors?); and
  • Health and safety instructions (who is responsible for what?).

Working with you

Whether you're starting from scratch or have been in business for years you'll benefit from working with Beckingtons advice on how to take you to the next level.

fixed-quote-man.jpg

About us

We work closely with our clients and act for a broad range of business....

business-advice-couple.jpg

Get in touch

Simple way to contact us. Just fill in a simple form.

free-consultation-couple.jpg

Our services

Find out details about what we can do
for you.