Are You Really Self-Employed?

Are You Really Self-Employed?

Although some prefer to be their own boss, there are fears that others – registered as self-employed – are being taken advantage of. Mark Krull, Director of Logic4training, explores this complicated subject to help clarify the situation.

Long-term employment with a single company is something few can rely upon anymore. As the ‘gig economy’ grows, it’s likely that more workers will be focusing on a patchwork career to make up their income.

A recently published report by the Department for Business, Energy & Industrial Strategy defines the gig economy as follows: “The gig economy involves the exchange of labour for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers, on a short-term and payment by task basis.”

It cuts both ways

The gig economy may represent a growing proportion of the self-employed, from taxi drivers to dog walkers, but there are many others working independently, who are managing their own careers. Just short of five million people are currently registered as self-employed in the UK and those in the buildings services industry form a significant part.

The genuinely self-employed cite flexibility as the main advantage. They have more control over when and where they work and what they do, and there’s a lot to be said for flexibility in the current climate. However, it’s important that those who consider themselves self-employed understand what it entails, to ensure they are not being taken for a ride.

In a lot of respects, a worker’s self-employed status favours their clients as many of the benefits afforded to employees are not available to those who are self-employed. Fears are that, by cutting down on long-term contracts in exchange for shorter or zero hour contracts, some employers are ducking their responsibilities.

Self-employment check-list

Defining your employment status can be tricky. Problems arise for those who spend most of their time working regularly for one client, where it could be argued that they should be classed as an employee. HMRC suggests that you are probably self-employed if the following statements are true:

  • You are in business for yourself, responsible for the success or failure of your business and capable of making a loss or a profit,
  • You decide what work you do and when, where and how you do it,
  • You work for more than one client,
  • You can subcontract, hiring others to work for you,

You are responsible for fixing unsatisfactory work in your own time,

  • Your employer agrees a fixed price for the work – and your remuneration doesn’t depend on how long the job takes,
  • You use your own money to buy business assets, cover running costs, and provide your own tools and equipment for your work.

Being self-employed, you take responsibility for your own NI and tax liabilities and pay through Self-Assessment. Employed workers pay through the PAYE system, where tax is calculated and taken automatically at source, before they see their pay packet.

In last year’s budget, plans to raise taxes for the self-employed were quickly reversed. There was such an outcry from those who felt lower rates of taxation compensated for the absence of benefits and protection afforded to staff. If you’re self-employed you don’t get statutory holiday or sick pay and the company you work for doesn’t make any contribution towards your pension. Neither do you benefit from the legal protection available to staff – an entitlement to the National Minimum Wage and protection against discrimination and unfair dismissal.

If you need clarification about the employment status of yourself or those working for you, I recommend you seek legal advice from a lawyer or trade association.

At Logic4training we explore the subject further in our free business guide on Employment. There are also other guides in the series, which provide useful information on training, working in the trades and setting up a business.

You can download the free business guides at:

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