Self employment and redundancy.

[DeanR32]

Evening all

My father in law and I are both self employed (CIS) and have been sub contracting for a utility company who have gone under.

Now, because we've been with the same contractor exclusively for the last 13 years, he seems to think we'd be as good as PAYE, and therefore entitled to redundancy pay. I think he's talking st but thought I'd ask on here once and for all.

So does working for the same contractor for a certain amount of time give the same rights as PAYE? He says two years makes you as good as.

Cheers

[bapa]

Sounds like you might be, I negotiated a settlement on something similar earlier this month.
This might be a useful starting point http://www.hmrc.gov.uk/calcs/esi.htm.
N.B. If he wants to pay it, I wouldn't be arguing...

[DeanR32]

The contractor doesn't want to pay me and the in law anything, but my father in law reckons we should be entitled to redundancy just like a PAYE employee.

That link says the page cannot be found mate.

[edc]

If you are deemed to be an employee then you may be entitled to a statutory redundancy payment. This is capped at £430 a week. Clearly, neither party deemed you an employee over the past recent years so to 'get' the status you are going to have to lodge a claim at the Tribunal. Without knowing age and start dates I would estimate a statutory redundancy payout to be £6k. You will burn up most of that in fees, stress and lost working days for prep and attendance.

[Eric Mc]

Just because you weren't treated as employees for tax purposes does not automatically mean you are NOT entitled to be treated as an employee for other purposes.

However, your case for entitlement to any redundancy would be weaker due to the fact that you both seemed perfectly happy to accept your non-employed status right up to the moment it was no longer convenient for you.

[bapa]

DeanR32 said:

That link says the page cannot be found mate.

Sorry. Cut and pasted below


Employed or self-employed?
In order to answer this question it is necessary to determine whether the person works under a contract of service (employees) or under a contract for services (self-employed, independent contractor). For tax and NICs purposes, there is no statutory definition of a contract of service or of a contract for services. What the parties call their relationship, or what they consider it to be, is not conclusive. It is the reality of the relationship that matters.

In order to determine the nature of a contract, it is necessary to apply common law principles. The courts have, over the years, laid down some factors and tests that are relevant, which is included in the overview below.

As a general guide as to whether a worker is an employee or self-employed; if the answer is 'Yes' to all of the following questions, then the worker is probably an employee:

•Do they have to do the work themselves?
•Can someone tell them at any time what to do, where to carry out the work or when and how to do it?
•Can they work a set amount of hours?
•Can someone move them from task to task?
•Are they paid by the hour, week, or month?
•Can they get overtime pay or bonus payment?
If the answer is 'Yes' to all of the following questions, it will usually mean that the worker is self-employed:

•Can they hire someone to do the work or engage helpers at their own expense?
•Do they risk their own money?
•Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves?
•Do they agree to do a job for a fixed price regardless of how long the job may take?
•Can they decide what work to do, how and when to do the work and where to provide the services?
•Do they regularly work for a number of different people?
•Do they have to correct unsatisfactory work in their own time and at their own expense?

[Eric Mc]

Those are the tax status tests.

An employment tribunal deciding on employment status may come to different conclusion looking at the same criteria.

[Zyp]

Eric Mc said:

Those are the tax status tests.

An employment tribunal deciding on employment status may come to different conclusion looking at the same criteria.

If a tribunal found that the OP was indeed employed for all those years, wouldn't HMRC be banging on someone's door demanding lots of employers NIC's that hadn't been paid?

[Eric Mc]

Zyp said:

Eric Mc said:

Those are the tax status tests.

An employment tribunal deciding on employment status may come to different conclusion looking at the same criteria.

If a tribunal found that the OP was indeed employed for all those years, wouldn't HMRC be banging on someone's door demanding lots of employers NIC's that hadn't been paid?

Possibly - but not always. There isn't a direct link between the different bodies who need to interpret employment status. HMRC does not have the resources to pursue every court or employment tribunal decision that may indicate that employment status had been misinterpreted by an employer.