DISADVANTAGE EMPLOYER
Perhaps that’s enough for employers; the flexible workforce and cost-
effectiveness outweighs the complete lack of commitment to any one
client. Sure, there’s loyalty out there, but self-employed status starts but
by no means ends with no mutuality of obligation; there’s no guarantee
to either offer or accept work, just like the much-maligned zero-hours
contacts – we are, after all, the original gig economy.
Changes in legislation back in 2014, designed to combat ‘false
self-employment’ gave intermediaries such as crew companies the
responsibility for collecting PAYE contributions.
This applies only to companies who contract to supply personnel
only to a client; adding technicians to the supply of kit is not seen as an
intermediar y-type relationship. Even so, the presence of a zero-hours
contract doesn’t guarantee loyalty. There are, however, companies out
there that employ technicians on a minimum-hours contract, giving
guarantees of earning for the worker and availability for the employer.ADVANTAGE WORKER
Although not quite the same as the days of tax-free overseas earnings,
self-employment is seen by some as a tax-efficient way of working – latterly
higher earners forming single director Ltd companies as a way of taking
earnings as dividends until that advantage was neutralised by the man with
the red briefcase.
Freedom to pick and choose when and where you work is attractive, but
only when there’s the work to choose from. Our workforce sur vey last year
suggested that workers are typically busy for 200-250 days per year.DISADVANTAGE WORKER
Tax efficiencies don’t count for much for the 24% of respondents to our
sur vey that earn less than £20k. The savings count for nothing when
you take away the protection of sick pay, maternity/paternity leave,
paid holiday and other employee protections; let’s not forget the
regular monthly pay, too, rather than the possibility of having to chase
payments that are relied on to pay household bills.
Advantages may exist somewhere in the turnover sweet spot of £20k
to £60k where 55% of workers reside, perhaps at the higher end of the
range. Consider recent changes to employment legislation – workplace
pensions and shared parental leave are but two; ever y workplace
improvement is an advantage to employees that doesn’t find its way
to the self-employed workforce, the current #selfieleave campaign
highlighting the need for self-employed people to have the same paid
parental leave as those who are employed.
The legislative stick is backed by the employee benefit carrot, but that
in turn increases the perceived cost of PAYE employment to companies.
Can a self-employed technician really be in a position to pay themselves
if they’re ill, take time off to enjoy the joys of new parenthood, take 20 daysplus bank holidays (in lieu perhaps) and pay 10% of ever ything they earn
into a pension? With the concept of free at the point of deliver y healthcare
also under threat and health insurance likely to be an employee benefit that
becomes the norm, day rates will surely have to rise.THE DIVERSITY QUESTION
Something that isn’t often considered is whether self-employment
encourages a diverse workforce. Does our sector attract a certain type of
person? Our research suggested single straight male, state school educated
with the majority living in London and the South East. As work can generally
be geographically disparate, using self-employed techs for anywhere means
that a company’s workforce may not reflect the diversity of its locale. Those
companies that make efforts to reach into their local community, to open
up opportunities to those who might mistakenly think that this industr y
isn’t for them, may well find hidden gems and potential assets.HANG ON, ARE YOU ACTUALLY SELF-EMPLOYED?
Who makes the decision that you’re self-employed, anyway? You? You have
made the decision that you want to offset some expenses against tax. Your
client? They have decided that they want to pay you their day rate and leave
you to sort the rest of your personal fiscal arrangements? Of course, it’s
neither; HMRC decide what is and what isn’t self-employment, according
to a range of indicators.
It’s been a long time since simply working for more than one company
secures self-employed status; there’s also talk of entrepreneurial risk, not
charging by the hour but invoicing for a job, one price agreed and charged,
if the job takes longer, the price is fixed.
Look at the HMRC website and use their employment status calculator
and only one indicator is considered: substitution. The calculator asks if the
individual contractor can provide a substitute, if they are required to find
the appropriate substitute and if they are required to pay the substitute.
Three ‘yes’ answers gives clarity: they are self-employed. Any other
combination gives a hugely helpful ‘maybe’ or a clear ‘not self-employed’.
Not ever ybody has a clear picture in their head of providing technical
ser vices rather than being a technician. Sure, the intention is of turning up
and doing the job in exchange for money, but the nature of the relationship
must be a contract to provide ser vices, to take that inert pile of boxed
technology and apply your skills and knowledge to turn it into a functioning
system because the people who own it can’t.
Are we fine just carr ying on because that’s the way it’s been done in the
past? Are the advantages fairly balanced between client and individual?
Are we actually sailing a bit close to the wind in the eyes of HMRC? Perhaps
that’s just down to you and your accountant but it’s always good to keep
up with those subtle changes in approach.
TPi
http://www.psa.org.ukPSA: THE BIGGER PICTURE