This may have been done to death but!

[cfmonk]

The discussion about employers not giving employees rights by treating them as freelancers has been around for a while but I just noticed this in the Jobs Vacant forum:

 

"Employed on a freelance and self employed basis."

 

It makes me angry, not only for what it is but also because the poster has obviously not realised what an absolutely oxymoronic statement he / she has made!

 

Chris

[stringman]

The discussion about employers not giving employees rights by treating them as freelancers has been around for a while but I just noticed this in the Jobs Vacant forum:

 

"Employed on a freelance and self employed basis."

 

It makes me angry, not only for what it is but also because the poster has obviously not realised what an absolutely oxymoronic statement he / she has made!

 

Chris

 

well surely if the individual is working more or less full time for that company then they get similar rights to full time employees.

when I first went freelance I was asked by several companies to provide my schedule D number and several invoices to other companies so they could prove I was not working exclusively for them. ( mind you I got around that by being a ltd company)

[cfmonk]

That is exactly my point. These people are EMPLOYED, you cannot be EMPLOYED on SELF-EMPLOYED basis. Your services can be engaged as a self employed individual or a freelancer but you are then allowed to swap yourself for other people, especially if you are a limited company. This is just an example of a firm trying to do people out of their legitimate rights as EMPLOYEES (i.e. sick pay, holiday pay, pensions, maternity and paternity leave).

 

C

[paulears]

However, if you are willing to take the chance and lose out on your rights, pensions, sick pay etc then that may well be why I get paid an awful lot more than the 'proper' employees.

 

It does also work the other way. A regular client - a very large company always paid my fees by deducting 22% as tax, and provided a tax certificate that my accountant then cross-claims back. No NI, and they make sure I'm always termed as an associate, 100% NOT an employee. However, this year I received a notice of coding with a note telling me that I am still NOT an employee, but they have provided my details to HMRC and will have tax deducted at source using this tax code. The tax reference number and office was not the one I use. I called HMRC - and they tell me I am now 2 people. I am a self-employed person, who is also a separate PAYE entity. They say it isn't a problem, they know I am self-employed and this won't cause problems. So I am an employed self-employed person, who isn't an employee officially!

[cfmonk]

However, if you are willing to take the chance and lose out on your rights, pensions, sick pay etc then that may well be why I get paid an awful lot more than the 'proper' employees.

 

I think this may not be the case in this instance. And there are a LOT of freelancers / self employed people who do not earn more than employees and don't get the benefits either!

[andy_s]

These people are EMPLOYED, you cannot be EMPLOYED on SELF-EMPLOYED basis.

C

 

it's far more complicated than this.

Paul's example is one complication.

 

Another is the agreement between Equity and the revenue where actors and stage management have a contract of employment which gives them and the employers various rights and responsibilities, but they are treated as "Self employed" for tax purposes.

[Bryson]

It also depends on whether you go for the technical or precise meaning of "employed" or the colloquial or common meaning, if it's semantics we're interested in...

[zonino]

"freelance" actually has no legal definition, and can actually be used to refer to someone who provides service/services for a number of companies, either as an employee or self-employed!

 

very complex area of law.

[cfmonk]

Bryson: I was talking about the use of the term as far as providing employment benefits go including pensions, sick pay, paternity pay and maternity pay , holidays etc. I think you will agree the provision of those / lack of providing those is more than just semantics.

 

 

Zonino: Freelance may not have a definition but the HMRC goes quite a long way in explaining the difference between being self employed and an employee. See the info from their website below.

 

 

Employee

 

If you can answer 'Yes' to all of the following questions, you are probably an employee.

 

* Do you have to do the work yourself?

* Can someone tell you at any time what to do, where to carry out the work or when and how to do it?

* Do you work a set amount of hours?

* Can someone move you from task to task?

* Are you paid by the hour, week, or month?

* Can you get overtime pay or bonus payment?

 

Self-employed

 

If you can answer 'Yes' to all of the following questions, it will usually mean you are self-employed.

 

* Can you hire someone to do the work for you or engage helpers at your own expense?

* Do you risk your own money?

* Do you provide the main items of equipment you need to do your job, not just the small tools many employees provide for themselves?

* Do you agree to do a job for a fixed price regardless of how long the job may take?

* Can you decide what work to do, how and when to do the work and where to provide the services?

* Do you regularly work for a number of different people?

* Do you have to correct unsatisfactory work in your own time and at your own expense?

[zonino]

The majority (if not all) of that list is taken from a variety of case law etc, HMRC aren't actually explaining freelance, they are explaining self-employed, for which there is a legal definition.

 

Also, some self-employed persons are also classed as workers, and therefore are entitled to holiday pay under EU law, however not all self-employed persons are entitled to this (for example, persons operating through a limited entity are not entitled to holiday pay from the contractee)

 

 

<pedant>The HMRC doesn't make sense <sic>The Her Majesties Revenue & Customs</sic>

 

More info which is more specific/related to our industries can be found here:

 

http://www.hmrc.gov.uk/specialist/film_industry.htm

http://www.bbc.co.uk/supplying/freelancers...reelancer.shtml

[Bryson]

Bryson: I was talking about the use of the term as far as providing employment benefits go including pensions, sick pay, paternity pay and maternity pay , holidays etc. I think you will agree the provision of those / lack of providing those is more than just semantics.

 

 

I agree. The point I was trying to make was that you are referring to the technical or legal definition of "employed" and that the word is also used colloquially with a much broader meaning. That may or may not annoy you, but it is the case. It is used too often to be plain "wrong" - it's a different (but related) definition of the same word.

[cfmonk]

The two are often interchanged, however someone who is an employer should know the difference and use them appropriately. That's just my opinion anyway and I believe it is also that of HMRC, and any employment tribunal / claim for unfair dismissal / Low Pay Commission investigation.

[zonino]

Yes the two often are interchanged, then again, lots of people interchange They're, their and there - it doesn't make them right!

 

If it can be shown that a someone engaged as on a self-employed contract should have been employed on an employee contract, then the benefit can be back dated and the contractee required to pay the benefits (both to the employee and HMRC)

[John Diamond]

Recently, there have been a number of cases where companies have gone out of business due to back dated tax and National Insurance contributions being demanded by the HMRC after investigations into the way the companies employed their staff had demonstrated that those businesses had been paying crew on invoice as a sub-contractor when they should have been paid as employees. There are only two classifications that I as an employer consider when establishing employment status of an individual: Employee or Sub-contractor.

 

It is the responsibility of employers to ensure that the individuals they have working for them are given the appropriate employment status. The term 'freelancer' as highlighted previously is not a legal term. It just refers to the fact that an individual works for more than one employer. The individual may be engaged as a Sub-contractor on one job but on another job an employer will pay them as an employee through their PAYE system. 'Freelancer' is a term that an individual (and not an employer) will apply to themselves often after having registered themselves as self-employed with the Tax Man. I am amazed at the number of potential crew straight out of the nearest technical college who tout themselves as self-employed freelancers when the only employment they are getting is work that obviously defines them as employees but want they want to be paid on invoice because they are a 'freelancer'.

 

If you are being paid through PAYE you have an employer. If you are paid by invoice you have a client. There still seems to be the perception that if you can charge on invoice then you can use creative accounting to ensure that your tax bill is more favourable toward the individual than the taxman. If, as a freelancer, you are running a proper self-employed business with overheads, costs and show a "significant busniness risk" you will have legitimate expenses you can claim tax relief on. If the only costs you have related to your work is getting you to and from work, a toolbox of basic tools and couple of sets of blacks and safety boots then there is not going to be much difference in the tax you pay anyway. Your employer should be covering the cost of everything you require to carry out your job. Even if you try to disguise yourself as a limited company it does not completely protect you.

 

As an employee, your employer has defined legal obligations to protect your rights as an employee such as ensuring that you are safe in your place of work, that you have been provided with everything you need to carry out your duties, that you are paid on time and the associated benefits like holiday & sick pay are included etc. It also helps the employer to ensure that the Health & Safety policy is more easily provided for, implemented and demonstrated as an employer has more influence over employees to make sure this happens than they do with a load of sub-contractors. Any good employer will already be ensuring this and any negligent employer will either have to catch-up soon or risk loosing their business or worse have a work place death on their hands.

 

Being a sub-contractor means that you are responsible for, among other things, your own Health and Safety, Insurance, and any tax and National Insurance due to HMRC if you employ anyone. If you are held liable for any incident and someone dies or is injured then the courts may be chasing not only the employer but you as well. Often the standard insurance you may recieve as a member of a trade organisation does not cover you for the work you are actually required to carry out and policy details should be checked thoroughly. Corporate Manslaughter legislation is now in force.

 

As a sub-contractor, the client that has engaged your services does not necessarily have to pay you on time. They may dispute your invoice if your services are not up to scratch, they may delay and delay payment because their cashflow is tight and they may go out of business owing you 1000's of pounds leaving you with nothing to pay your tax bill with at the end of the year. I know a number of people, including myself, who recently have suffered financially due to a lighting company going bust. My crew who worked alongside others on the same jobs got paid because, as our employees, they must be paid on time as described in their contract of employment while others 'freelancing' for said 'bust' company will probably not have their invoices paid.

 

Final word is:

 

If you are working as an employee, your employer has legal obligations to you as an employee. Be aware of your rights and don't be afraid to ask questions!

 

If you are being sub-contracted, you have legal obligations you must meet and business procedures you have to follow to ensure that the paper trail between you and your client is all above board.

[zonino]

Nice post John