The correct classification of staff as employee, worker or self-employed continues to be a hot topic with both the Employment Tribunals and HMRC.

Deliveroo – we have looked at a number of cases in which it has been ruled that taxi drivers, drivers and couriers are workers, meaning they’re entitled to extra pay and benefits such as the National Minimum Wage, holiday pay and inclusion in auto-enrolment pension schemes. In Deliveroo, it was concluded the Deliveroo riders are not workers because they can appoint a substitute rider if they don’t want to accept a job themselves. The Independent Workers Union of Great Britain is now challenging this decision on the basis that the ability to appoint a substitute rider is meaningless in this case because it was conditional upon the Deliveroo rider ensuring that their substitute had no unspent criminal convictions, had the right to work in the UK and complied with modern slavery requirements. A fairly tall order for someone delivering pizzas to supplement their student loan!

Meanwhile, HMRC has a dedicated team reviewing employment status of staff and collecting taxes from employers who have misclassified their staff. It has been reported that in the 2016/2017 tax year, they collected £819million after investigating employers who had misclassified their staff. I’ve looked in detail before at the factors that both the Employment Tribunals and HMRC will look at when deciding on the classification of staff as employee, worker or self-employed, and so you may be fairly familiar with these by now. But, if you’re unsure and would like to talk about assessing the status of your staff then please let me know.

An additional layer of complexity for employers to deal with is that the definition of worker for auto-enrolment pensions purposes is slightly wider than that for employment rights/ tax purposes. This means that you could have staff who qualify for auto-enrolment pension, even though you might otherwise categorise them as being self-employed. The auto-enrolment pension rules talk about eligible ‘job holders’ and defines a job holder as a worker who is working under a contract of employment or apprenticeship, or any other contract under which he/she undertakes to perform services personally for another party to the contract. This means that your self-employed staff could potentially be eligible for inclusion in your auto-enrolment pension if they’re obliged to give personal service. Your pensions provider may be able to help you assess the status of your staff for pension purposes.

For more information please contact Hannah at HannahStrawbridge@eatonsmith.co.uk