Question: I worked for a company for a year on an annual renewable contract. I was initially given the option of PAYE or self-employed and chose PAYE. After a year I wasn’t given the option to choose and was forced to become self-employed. I had a fixed annual salary with no overtime and all expenses were paid for by the company. It was basically a 9 to 5 job, 5 days a week and this meant that I couldn’t realistically work for any additional clients. The following year my department was closed and contract was not renewed. Do I have any redress against the company?
Answer: The answer to your question is possibly. It sounds as though you were employed for 12 months and then changed to self-employed although nothing really changed in the way you worked – you simply got paid differently and accounted for your own tax etc. In such cases the court would look at the reality of the situation and not the ‘label’ given to the contract. The tribunal would look at certain aspects of the way you work to establish whether you were employed or self-employed. These are known as the ‘badges of trade’ and is the same test that is used by HMRC. One of the key factors in this test is the ‘mutuality of obligation’ test. From what you have said, it sounds as though you were obliged to come to work for set times and that the company provided work during those times. There is a strong possibility that an Employment Tribunal would find that you were in fact employed, not self-employed. This means that you would be able to bring a claim for unfair dismissal if the company did not follow the correct procedures when dismissing you. Employment Partner Kate Fretten says, “If your department was closed down this should have been dealt with as a redundancy situation and you are potentially entitled to a statutory redundancy payment and damages for loss of earnings if you have been continuously employed for more than two years.”
We have offices in the Christchurch, New Milton and the New Forest. Our Employment team also cover Bournemouth and Poole. For a free initial chat, please call 01202 499255 and Kate or a member of the team will be happy to discuss any questions that you may have.