Building Contractors: Employed or Self Employed?

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In a recent highly publicised case the Court of Appeal decided that, even though the contract that existed between him and the main contractor set out that he was a self employed contractor, he was, nevertheless, an employee. This created an entirely different relationship to the one that they had both signed up to several years earlier. There are certain advantages to being self employed, which we will set out below, which, the main contractor said, the sub-contractor had taken full advantage of. The decision of the court made certain advantages of being an employee available, a situation that, unsurprisingly, the main contractor found unpalatable. It is possible that the case will be taken to the Supreme Court for further clarification. In the meantime, we set out below some of the benefits and disadvantages, for Devon builders and their employees, of each of the types of employment.

Self Employed Contractors

  • There is no requirement to withhold and pay tax and National Insurance contributions on behalf of the worker.
  • They are not entitled to paid holidays.
  • They are not entitled to statutory sickness, maternity or paternity payments
  • They are easier to dismiss.
  • A genuine self-employed contractor is less capable of being asked to work exactly in accordance with orders.
  • They are able to appoint someone else to carry out their duties.
  • They are able to work for someone else.
  • They have a greater degree of control over his activities.
  • They have to fix any defective work in their own time.
  • Tend to earn more.

South Devon Building Contractors

Employees

  • Employees may be harder to dismiss.
  • They are entitled to minimum notice periods.
  • Employees have the employment benefits set out above, together with the right not to be unfairly
  • Employers are required to administer and pay the tax and NI contributions of staff.
  • Employees are entitled to protection over the number of hours that they are required to work and are entitled to the National Minimum Wage.
  • Have the right to ask for flexible working.
  • Are entitled to time off for emergencies.
  • Can join the employer’s pension scheme.
  • Is subject to the employer’s disciplinary and grievance procedures.
  • Tend to earn less.

Self- Employed or Employed, that is the question.

Although a contract between a main contractor and a self-employed contractor might state explicitly that the person employment is on a self-employed basis, as we have seen above, this does not always resolve the question of employment status. Some employers seek to have the best of both worlds by having virtually total control over the employee whilst affording them none of the rights and protections that  are available to an employed person. As a result, there have been many cases where the courts have intervened, examined the exact nature of the rights, ,responsibilities, roles and duties of an employee and, in the light of that examination, taken the view that the relationship is, as a matter of law, that of employer/employee rather than contractor and self-employed sub-contractor.

Summary

There are benefits and disadvantages to both the employer and the employee in each status. What is clear is that the courts will not permit employers to reap all of the benefits of having self-employed staff as well as all of those that are applicable to having employees

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