If a worker is self-employed for both tax and NI purposes, surely he isn't entitled to SSP?

Posted in : Seamus Says - Employment Law Discussion on 6 July 2018
Seamus McGranaghan
O'Reilly Stewart Solicitors
Issues covered:

Q: If a worker is self-employed for both tax and NI purposes, surely he isn't entitled to SSP?

Scott: Someone's written in, saying, "I'm rather confused about your coverage of the Pimlico Plumbers case, as it implies that all workers are eligible for both holiday and sick pay. I get the holiday bit. It's the sick pay I'm concerned about. If a worker is self-employed for both tax and NI purposes, surely he isn't entitled to SSP." That's the Smith v Pimlico Plumbers Supreme Court decision, an interesting decision, worthwhile reading, and if you don't want to read the whole decision, there's certainly plenty of commentary which you can read and get a clear understanding of it.

But this case is really about the aspect of the employee was miscategorised. So I shouldn't say employee, but the worker was miscategorised in that, very much treated as a self-employed worker in the sense that he paid his own tax, paid his own National Insurance. And certainly there as a finding by the Supreme Court that he did pay his own tax and National Insurance.

But their view on it was that the initial tribunal had been correct and that this was, in fact, a worker rather than a self-employed.

Scott: And that's because he had very limited opportunity to bring in anybody else. He wore the Pimlico Plumbers' uniform.

Seamus: He had a van.

Scott: He drove their van, he did all those kinds of things. So there are a lot of control tests. You apply all those usual stuff. He was deemed to be, by the Supreme Court, a worker. And as a worker, he would be entitled to holiday pay and he would be entitled to various other things.

Now, the issue here is he had not been a worker. He had been happy enough claiming self-employed status, and therefore he didn't qualify for SSP. And then he ended up taking an employment claim at the tribunal . . .

Seamus: Yes, because he fell into a period of sickness. And that's where his issue was, in terms of claiming that he was, in fact, a worker. It’s interesting in the decision that they do set out the various tests that they apply, and they do clearly say there are, there are pros and cons, if you want to put that way, and ups and downs.

But ultimately, their decision was that he was a worker. He's a worker, and therefore he gets an entitlement. And strictly speaking, if you are not self-employed and you're a worker, there is an entitlement to holiday and also to statutory sick pay rather than company sick pay or anything like that. But the SSP, obviously there are various aspects that you need to look at in terms of even a normal employee and their entitlement to SSP. But it was one of those circumstances where this employee hadn't paid tax, hadn't paid National Insurance.

Ultimately, probably this is a query that goes back to HMRC if you deal with it, with statutory sick pay. They would make the decision in terms of what would be payable. Whether or not there would be any sick pay that would be entitled to be back-paid is one matter of it. If the NICS hasn't been paid, it may be that only going forward you would have an entitlement to SSP.

Similarly for the holidays as well. Roughly speaking, if we're moving back through to an entitlement for holidays, we say 18 months before you lose them again, and after a certain period of time, and the period drops. But then we had some discussion then about the King and Sash decision, and probably from in and around November 2017, where it provided for a longer period for a holiday entitlement.

Scott: That's because, like Mr. Smith in the Pimlico Plumbers case, in King and Sash Windows, Mr. King was wrongly categorised as self-employed, and therefore had been denied his statutory rights that would have applied to a worker. And therefore there's no backstop on a holiday pay qualification there. So presumably — and it's not really part of this question here — but presumably, in the Pimlico Plumbers case, anyone that's wrongly categorised, and all the other gig economy stuff that I keep coming across, they could go back a number of years, saying, "I've been denied my four weeks' holiday under the Working Time Directive, and therefore I want four weeks' holiday pay, going back to whenever I started."

Seamus: And there could be huge amounts of monies that companies, in the gig economy, would have to pay. And specifically, the commentary talks about the likes of Uber delivery and those sorts of companies that, with they're categorised the minute as being self-employed. And whenever you would apply the tests that the Supreme Court did, you may very well find that they are, in fact, workers.


This article is correct at 06/07/2018

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Seamus McGranaghan
O'Reilly Stewart Solicitors

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