Employment Rights for 'self-employed' - Unite Union does its stuff

[BAJR]

Well, tell you what... why don't you pretend I do, and pretend I dont. then just cut to the chase without this slow painful process of question and answer.

[Unitof1]

Are we pretending that Gelis client is an evil employer who has enforced Geli in false self employment or has Geli found a viable alternative for transient short term digging work from which the self assesment skills might be transfered elsewhere.

As many of us have experienced work is thin on the ground so we have to take what's available. In my case the only work I could attract was with a employer who seemingly only employs people on a self employed basis. Being new to the whole self employment game I entered into this situation with quite a high level of naivety and have begun to realize that the terms of my employment are perhaps not all they may appear to be - certainly the money paid does not reflect any major improvement considering the loss of certain entitlements and rights you'd get PAYE. Without saying too much just read what BAJR Admin put up and you will understand what position I believe I am in!

Maybe our advice might be that “thin on the ground so we have to take what's available” are not the best reasons for taking up self employment or any employment. The best situation comes when demand out strips supply. Possibly Geli was miss sold self-employment.

Unfortunately considering the current economic situation and work being so thin on the ground people working for this firm are not likely to rock the boat. We are the lowest paid workers on the project the firm is currently engaged with. Recently it was discovered that other contractors are getting paid time and half for all work over the basic 8 hour day, where as the self employed archaeologists get only the basic hourly rate. There was much grumbling in the cabins, and a meeting with the core staff of the firm was convened. This meeting basically involved the PO telling staff that work over the 8 hour day carried out during the week was classified as extra work not overtime - only weekend work is overtime. So despite all the rumblings in the cabins nothing has changed , basically because people are not willing to get together and fight for their rights let alone being motivated enough to join a Union. The fear of not having any employment is greater than remaining in a work situation that is exploitative!


Looking at the overall situation, I believe what some archaeological firms are doing is ultimately wrong and would gladly see change to the situation for the benefit of myself and my colleagues, but sadly as far as the project I am working on, I am just a voice in the wilderness

Isnt this to do with terms of contract not about any principles of self employment.

[BAJR]

THis is about the principals of self employment...

About what can and cannot be classed as self employment and whether a company can decide everything for you, without these principals being adhered to.

Geli is not being mis-sold self employment, he and others are being placed in a position where they must accept a position where they are being employed in all but name... ie sham self employment.

http://www.contractoruk.com/ir35/ir35_su...ation.html

THis is where, as in all these cases, legal advice is required... rather than 'just' our forum legalese

When deciding whether a contract amounts to employment (a contract of service) or self-employment (a contract for services) there are three essential questions to consider:

• Is there a requirement for the worker’s personal service?
  
• Is there a sufficient degree of control over the worker?
  
• Are the mutual obligations of the contract consistent with employment?
  

Why are these three areas so important? Because if the answer to any of these questions is ‘no’, the contract cannot be an employment, whatever other terms it may contain.

however...

A lot has been written on the subject of mutuality of obligations in the context of employment but instead of getting tied up in phrases like ‘care and continuity’ and ‘trust and confidence’ it is probably safer simply to look at the definition that has come out of the major case law decisions.

In cases such as O’Kelly v Trustehouse Forte (1983) and Carmichael v National Power (1999) the question asked was: is there an obligation to offer and an obligation to accept future work. In both cases the answer was no and therefore the courts found that there was not sufficient mutuality of obligation to form a contract of service.

which could of course be the loophole used.... no obligation... no employment. See hopw complicated it is.

The inland revenue test..
http://www.hmrc.gov.uk/calcs/esi.htm

is potentially flawed. and the way round employing people as self employed is found.



ps Geli...

it would be potential useful however if you were to take the test and copy paste your answers into an email for me

[Unitof1]

ESI Reference: 3ND9PKPBJR
The worker is self-employed.

The worker's trade is not out of scope.
The trade of the worker is Other.
See above for proof of worker_trade.
There is a determinate indication of substitution.
Any obligation of substitution on the worker is realistic.
Under the terms of their contract, the worker does not have to provide someone else to do the work if they are unable or unwilling to carry out the work personally.
Any right of substitution on the worker is realistic.
The contractual right to provide a substitute reflects what happens or would happen in practice if the worker is unable or unwilling to carry out the work personally.
There is a high indication of financial risk.
It is definitely the case that the worker is required to provide the major items of equipment needed to do the work apart from minor items of equipment or those tools of the trade that workers customarily provide.
It is the case that the worker is required to provide the major items of equipment needed to do the work apart from minor items of equipment or those tools of the trade that workers customarily provide.
See above for proof of equipment.

This conclusion is justified on the following grounds:

--------------------------------------------------------------------------------

The level of indication of substitution is low.
There is a low indication of substitution.
There is a determinate indication of substitution.
Any obligation of substitution on the worker is realistic.
Under the terms of their contract, the worker does not have to provide someone else to do the work if they are unable or unwilling to carry out the work personally.
Any right of substitution on the worker is realistic.
The contractual right to provide a substitute reflects what happens or would happen in practice if the worker is unable or unwilling to carry out the work personally.
There is not a high indication of substitution.
See above for proof of substitute_obligation.
The engager would arrange for someone else to do the work (if applicable) if the worker is unwilling to carry out the work personally.
The engager would arrange for someone else to do the work if the worker is unwilling to carry out the work personally.
There is not a medium indication of substitution.
The worker has the right to send someone else to do the work if they are unwilling to carry out the work personally.
There is not a medium indication of help.
The worker has not brought in a helper in practice and paid them out of their own money.
The enquiry is in relation to a future contract.

--------------------------------------------------------------------------------

This conclusion is justified on the following grounds:

--------------------------------------------------------------------------------

The level of indication of financial risk is high.
There is a high indication of financial risk.
It is definitely the case that the worker is required to provide the major items of equipment needed to do the work apart from minor items of equipment or those tools of the trade that workers customarily provide.
It is the case that the worker is required to provide the major items of equipment needed to do the work apart from minor items of equipment or those tools of the trade that workers customarily provide.
See above for proof of equipment.

[simon johnson]

Few a few things for the 'genuinely' self-employed or those thinking about it:

*You should expect a premium above those that are on the books, but not necessarily a huge amount/day. The employer will be saving on employer's NI, holiday and sick pay, pension contributions and accrued rights such as redundancy etc. However, given the apparant minimum statutory provisions that most companies seem to default to, this would perhaps all accrue to no more than, say, 15-20%.

*Consider your status: sole-trader or limited company. One benefit of being a freelancer is that what money you do charge should go further than that as an employed person. I registered as a limited company. This makes my accountancy bill about twice what it would be as a sole trader but there are a number of benefits. Others (David??) will be able to give comparable examples for sole-trader basis. I operate as follows:

Pay: as a director, the rules are a little bit different than for a 'proper' employee. I am registered for PAYE but pay myself a salary below the threshold for payments of national insurance and income tax (in my case ?100/week). This means I pay no national insurance contribuitions but because I am registered for PAYE I still qualify for a state pension. Obviously, its difficult to live off ?100/week but you can then pay yourself a dividend as a shareholder so long as you ar in profit. The dividend is taxed, but at a much friendlier rate.

Travel: Your company will be registered at home so you can claim travel and accomodation to site. The accepted rates without paying tax are 40p/mile for the first 10,000 miles and 12p/mile thereafter. In short, if you do 10,000 business miles a year you will be taking ?4k ouit of your business tax free for travel which as an employed digger you would be paying for out of your taxed earnings.

The Director's Loan Account: You can claim the full second hand value of any assets you put into the company such as books, which you can then take out, tax free, at any point so long as you are in profit.

Household Bills: you make a claim for phone, heating etc. based on the proportion of your home office so long as it is solely used as an office.

Insurance: The down side, you will need employers and public liability insuranc e which will cost, say ?200/annum. If you ar undertaking reporting work you would also be advised to have proffessional indemnity insurance. ?5m is likely to cost ?2-4K depending on how any given insurer assesses your risk.

Conferences etc: Fancy going to a conference? buying a book? Proffessional fees? it all goes through the books as a business expense.

At the end of the day, most free-lance diggers shouldn't actually end up paying much tax at all, if any, but the key is to do some research and then speak to a good accountant.

[chiz]

a good summary, but re setting your day rate, I would add that although your day rate will not be the same as that charged to clients by a unit for your work as an employee as they have greater overheads, they do have economies of scale. I set out a while ago some of the costs of self-employment (whilst demonstrating that the rates offered by certain units to 'self-employed staff' are woefully inadequate).

Bear in mind that you need to cover ALL your costs (insurance, travel, tools, rent, etc etc) yourself but also set money aside for your holidays, bank holidays, time off sick, unfunded time, CPD time (about 3-5 days a year) and time to go out there and get work. Then there's tax and NI to pay. Maybe you'd like a pension? or you need a new computer to write your reports? Its quite a chunk of extra you have to cover yourself. Plus add difficulties with cash flow and late payment. You can make the expenses work for you better than an employed person, but it is swings and roundabouts.

A few years ago the IfA came up with a calculation that for a MIfA level specialist the day rate should be at least ?200 a day to make MIfA level pay. I guess I'm allowed to say that there has recently been an IfA meeting to have a look at what they can do about helping freelancers.

As Unit says, it is best to be self-employed in times of demand, when you can offer flexibility, outflank the competition and charge accordingly, its less good when there is no demand, and even worse when you aren't covering your costs.

[BAJR Host]

All good points from Simon... good to see some clear and sensible advice! and also a timely reminder from Chiz ... Unit of one is (again as Chiz says right in the ups and downs of Self Employedness. It should never be seen as a tax dodge... rather a choice of personal preference.

ps send invoices to BAJR Towers, Chuffingly Wellpaid, Tax Haven, EH15 :face-approve:

[Unitof1]

Good points SJ and Chiz but I don’t think that most things are cut and dried about self-employed. Hosty keeps asking me for some definitive guide to self employment but I have resisted at most every turn (hes not agreed price for a start).

I have motives beyond my current state which is that I would prefer to work with more people who are self employed. I am glad to say that I do already work with quite a few but they are mainly specialists. What I don’t want, as I have been down the road a few times is to be the one who introduces somebody to self-employment. I would prefer a self employed to have done at least one assessment and then got an opinion. I think Geli’s example is a common one where it seems somebody finds that there is a job with the condition that you are self-employed and then feels that they were led into that state of being by the “enabler” (my latest word learnt from the ESI terminology). Almost as soon as they come across permanent staff/union they start comparing and the first Monday they feel a drug/alcohol sicky coming on and lose a fifth of their invoice out comes the groans. It also cuts the other way. I worked with three units as a self employed digger and I got wary of answering the how much after a while as it would normally bring out the lefties in droves. Most units also had their on going overtime battles in which self employment becomes another bone of contention In one situation I cut quite a good deal as a day rate as I tooted up holiday pension and employers NI. The enabler bit my hand off because they were paying for accommodation and they were about 100miles from base. I was in my home patch. Stupidly I blabbed to one of them and there was almost a riot. They couldn’t get their heads around added accommodation travel into their perks and subtracting tax.

Now I have a problem which is quite often I find work that could be undertaken by more people but I don’t want to become anybodies boss and the implications and administration of employing somebody else makes self assessment look like a walk in the park particularly if its going to be only for a day or a week and they are going to do basically the same work as me -dig. No site lasts for ever. To me employing somebody feels like doing their self assessment and national insurance and insurances and PPE ten times over with me potentially being a nasty criminal at every turn and with the likelihood that if I was to do all that “admin” I would want 100% or more profit just to insure against liabilities. I would be also setting up an example of a much higher risk taker which could be taken to show that the “others” were my employees-catch 22. On cash flow rate I would have to become vat registered, another accounting burden. I would also probably have to change my structure and become a limited company and go to taking a salary/dividend which is were the farces of Construction Industry Scheme, IR35 and S660A of the last ten years are about. That’s why I would be wary of going down SJ’s route of limited company. What do you do SJ for site workers?

But currently as you say hosty I do selfish things and can give advice on my selfish ways. An example is evaluations. I don’t compete for them but they come my way but in an example of a one day evaluation trench to which a unit might send two or three people out to do and there might be a structure of supervisor/project officer, So three people go to dig a trench for one day, is for me one self employed person digs over three days (depending on the significance). I might have a watching brief to do in that period so I stop that evaluation for a day or so and go and do the watching brief. I balance back filling machining my time the clients money. This does keep me small and selfish as hosty puts it. To get out of this lonely existence or to get out of the being in two places at once problem, one option I have is to exploit volunteers but the most attractive to me would be to work with other self employed people, people who I would have something in common with as an archaeologist.
But the discipline which is most beyond me is excavation and that is because the average number of features 20 a day, say five people four weeks turns into one person six months although if I can find a client who would accept that I would do it but it would probably be difficult to tout up front for such a circumstance but my fingers are itching to give it ago. Problem then is I would need to get rid of all my small jobs…

[BAJR Host]

I thank you Unit... for both a post that I read all the way through, but also one that should be read by anyone considering self employment. the last few posts (mine excepted) have clearly highlighted the pros and cons, the rest is up to the individual. I do like the concept of the enabler.... slinking out the alley with tempations of wild riches... I do agree that just because you get x ammount its not teh same as another getting x (-y) ammount... as at the end of the day they should be roughly the same I have a scale of chargeouts both on what I do, and what the client requires (even who the client is) Like Unit I am flexible and can react to the small job and save the smaller client cash... nobody gets hurt... however, I have to keep the work coming... if I sit in my room all day, and make no effort, then work does not come my way. and if you go through a week without work? we.ll get used to it.. or when you have to turn down jobs because there is only one of you. It is quite possible to create small self employed collectives for medium sized jobs... and why not... come together... dig, get out. If Unit could rely on calling up similar people (theres a thought) and they could do the same, then they could maximise employment.

THe thing is... nobody should 'force' you into it... you go to it willingly. I think Unit is right when he says

somebody finds that there is a job with the condition that you are self-employed and then feels that they were led into that state of being by the “enabler”

You have to ask the question - is this the probloem of the 'enabler' who can say... hey... they know the score (do they really?) or the newly fledged self employed person... ( are you?)

[chiz]

Good points lucidly put Unit! No its not cut and dried and does get difficult sometimes. Oddly as long as you can pay for a lawyer and accountant things normally get easier....
I agree particularly with the problems of scale, of employing other freelancers, and not least of day rate versus wage! I agree that it seems a lot of people have been walking into self-employement (or should that be 'self-employment') almost by mistake and without really knowing what they are getting into. I also agree that the basic misunderstanding by the majority of site staff of the difference between what constitutes a wage, take home pay, a day rate, turnover, costs and overheads means that they end up taking jobs that are well below any minima. And is cause for a lot of confusion and anger, often misplaced.

Self-employment should be about taking control, not being exploited. It is not suitable for everyone, and if you go into it, make sure you ARE self-employed and are getting a decent rate.

SJ, I really doubt a day rate of 15-20% above the digger WAGE is a high enough margin to cover all the costs of self-employment? Maybe 10-20% below a units day rate is more like it? I don't know, as that's not my main area of work? Or do you mean that after costs your taxeable profit (i.e. income) as a freelancer should be 15-20% higher than that of an employed comparitor? Due to the fact that you take more risk and are generally more responsible? In which case I agree! Gets confusing doesn't it!