EMPLOYMENT LAW

We are regularly contacted by self-employed associates in respect of the HMRC IR35 arrangements, which can treat some self-employed workers as being ‘employed’ for the purposes of tax and National Insurance (NI). IR35 is intended to ensure that those who are working in what might be described as ‘pseudo self-employment’ pay the same tax and NI as if they were an employee.

IR35 has a small-company exemption, so not everyone who is self-employed will be affected.

We are also contacted by business owners who are concerned that those they have contracted with on an associate basis may, irrespective of any IR35 issues, claim at a later date that they were an employee or a ‘worker’ and thus claim the associated benefi ts and employment protection of being employed: holiday pay, pension,

MARTIN FURLONG

is head of employment relations at the College annual leave and contractual notice periods.

For the associate and the client, the issue to be clear on is, what is the position in employment law terms? Is the associate ‘self-employed’, or are they, in reality, working as an employee? This is not just about how the contract purports to describe the relationship, but is equally about what happens on a day-to-day basis – does this show that the reality of the relationship is one of ‘employment’ or ‘self-employment’?

The developing law on whether workers are self-employed or not (see Pimlico Plumbers and the Uber cases) has meant that, as much as we would like to, the College is no longer able to provide a draft ‘associate/fee-sharing’ contract to members. At the moment, we do not believe that the previous ‘draft’ fee-sharing contract provides the necessary certainty for either the associate or their client.

Self-employed associate

If someone is ‘self-employed’ they are effectively working on their own account, and in doing so, they bear the whole cost and risk of running their business. The contract they will have with a client(s) will be a ‘contract for services’– that is, it will state what work they have agreed to do within the contract and no more. This work will be done without the associate being directly controlled by their client. It will usually be for the associate to decide how the work is done and when.

It may also be clear that it is for the associate to decide who undertakes the work – that is, it may not be themselves, but they can substitute an appropriate person (for example, another qualifi ed podiatrist) to deliver the contract. This is often referred to as a ‘substitution clause’. In the case of the associate, it is they who are providing the substitute, and in

Know your rights

When it comes to hiring or working as a self-employed associate, clarifying the terms of contract are key – and can prevent legal pitfalls later down the line.

such cases you would expect the associate, rather than the client, to bear that cost, and invoice the client afterwards.

A self-employed person will normally provide their own equipment, professional insurance and clothing. They will be paid gross (that is, without a deduction for tax and NI) for their services and it will be their responsibility to ensure that they pay the required tax and NI to HMRC.

A self-employed person will have to provide and fund their own pension, sick pay, maternity and annual leave costs. There will be no entitlement to any redundancy or statutory notice pay.

Someone who is self-employed cannot access the benefi ts of being an employed person, and cannot claim unfair dismissal, redundancy or sick pay from their client.

As a self-employed person there may be costs associated with running their business that they can claim tax relief on, such as the costs of running an offi ce or clinic, travel costs, the purchasing of necessary equipment, laundry, insurance and training costs.

If someone is ‘self-employed’, it is likely they will have a number of clients they provide services to. The least direction and control a client/company may have over a self-employed associate may indicate a ‘contract for services’. Conversely, the more direction and control a client has over a self-employed person may indicate there is a ‘contract of service’ (employment).

Employment

An employee, on the other hand, will be working under a

‘contract of service’ and the employer will deduct tax and

NI at source. If someone is an employee, they will have a contract with

Image: iStock

IR35: where can you get help?

As this article shows, there are several strands to consider when reviewing your working arrangements, or looking to take on new people to help your practice. If you are a self-employed associate, you may also want to review your arrangements. If you need more help: Our employment support team are always happy to help with your contractual queries – email employmentsupport@ cop.org.uk Our professional off icers can also help with general queries – contact professionalsupport@ cop.org.uk You can get general accountancy help from our approved advisers twdaccounts.co.uk/cop (please note additional charges may apply). If you wish to employ a podiatrist, or to be employed, we have a library of employment policies you can access as a member at membersarea.cop.org. uk/podiatric-practice/ professional-resourcesarea/guidelines and can also supply a standard employment contract. ACAS also has a wealth of material on its website, acas.org.uk

Our advice is in general terms for podiatrists and is free to members. If you need more specialist advice, we can provide details of how to get specialist legal suppport at competitive rates. an employer. That contract will be clear in its terms. The employee will be expected to perform work themselves. There will be a duty of mutual obligation. For example, the employer will expect the employee to be available for work and to work as directed, and the employee will be entitled to receive pay for the work done. If there is no work to do, the employee must be paid anyway as per their contract. It may also state that the employee is not allowed to work for anyone else without their express agreement. In such cases, the employer will provide what is required for the work to be undertaken, for example, the tools and equipment for the work and clothing (if necessary).

At all times during the contract, the employee will be under the direct control of the employer in respect of their work. The employer will also have to provide annual leave, maternity leave, a workplace pension, notice pay and redundancy benefi ts to the employee.

I am the client

If you are the person with whom the associate has contracted to provide services, you will want to ensure that there is clarity in the working arrangements made.

You have chosen to enter this contract for particular reasons. For example, your business does not have a suffi cient caseload to require someone on fi xed terms, you do not wish to be an employer of staff (with its associated costs and responsibilities), you may wish to be able to ‘fl ex’ your service to changing events and patient demand, and would wish to bring in people for particular work as and when required. It follows that you will want to ensure the contract you have with the associate is such that they cannot claim later they are, in effect, your employee. If this were to be the case, you may be liable for costs to your business, such as holiday pay, workplace pensions, maternity pay and redundancy.