What is false self-employment?
False self-employment occurs when workers are categorised as self-employed for the purposes of income tax and National Insurance Contributions (NICS) when, in fact, the type of the work they are carrying out means it would be more appropriate for them to be classed as employees.
Not only does false self-employment lead to the Government losing out on an estimated £350 million per year, it also means that workers who should be classed as employees miss out on their entitlement to sick pay, holiday pay and company benefits and to ensure they receive National Minimum Wage.
Obviously, that’s not to say that there aren’t times when self-employment is the correct option. Traditionally, to test whether employment or self- employment is the best option, you need to consider factors such as:
· How much control does the worker have over how and where they work?
· Is the worker able to send someone else to do the work on their behalf?
· Does the worker provide their own equipment?
What are employment intermediaries?
Intermediaries are companies that work with agencies to provide a flexible payroll solution for agency workers to fulfil contract roles. These companies deal with PAYE and national insurance payments on behalf on the contractor.
In recent years some unscrupulous employment intermediaries have been able to exploit loopholes in existing legislation to claim a worker is self-employed when this is not appropriate. This has-lead to a growth in the amount of false self-employment and has been a particular problem in the construction industry.
The new rules
The Government has decided to clamp down on the practise of false self-employment. They recently held a consultation on the issue and are strengthening existing legislation.
These changes will only affect workers who are supplied through an intermediary company and who are taxed on a self-employed basis.
From 6th April 2014, employment agencies must ensure that PAYE and NIC contributions are paid unless it can be proved that the worker wasn’t supervised, directed or controlled by any other person. This change means it is now the employment agency’s responsibility to demonstrate the legitimacy of a worker’s self-employed status.
24-7 Staffing's commitment
At 24-7 Staffing, we’re committed to making sure that all of our candidates are employed under the correct contracts – so that true self-employed candidates are correctly compensated for the extra risk they take on, while those that are working as employees are recognised and given the benefits they are entitled to.
We understand how important it is to carry out proper due diligence on the intermediary company used. We’ve invested a significant amount of time and effort assessing the intermediary companies we use giving you peace of mind that they are fully complaint with the new rules.