The Employment Law Blog

I am self-employed, am I ever entitled to holiday pay?

I am a self-employed plumber working for a company and have heard that the Pimlico Plumbers are entitled to a big pay out of holiday pay because they are not actually self-employed. As I am a plumber does this mean the same for me?

You will normally only have an entitlement to paid holiday and any subsequent payment (alongside other rights) if you are classed as a ‘worker’ or an ‘employee.’ That means that genuinely self-employed individuals are not entitled to a pay out because of this case. However, whether you are self-employed is not solely based on what you agreed with the Company you work for or what it says in any written document. It is based upon the reality of the relationship between you and the Company taking into account a number of factors. It does not follow that simply because you are a plumber you will have the same rights as Gary Smith.

In essence, the case of Pimlico Plumbers v Smith does not really change the law in this area, it, and other cases, have just put more of a focus on individuals working in the ‘gig economy’; a term used to describe individuals employed on a series of short-term contracts or freelance work as opposed to permanent contracts or those guaranteeing a minimum number of hours per week.

Employment status is ultimately a question of fact and involves a balancing act of assessing factors such as how much control the Company has over you and how integrated you are into the business. For example, in the Uber case the drivers were given a specific route that they had to follow to take their customers to their destination and drivers were required to select their vehicle from a list of acceptable cars which specified the model and colour. Other considerations include who provides the tools to do the work; whether you wear a company uniform or are identified as part of the Company, and whether there is an obligation for you to perform any work that you are offered.

One crucial point that was analysed in the Pimlico Plumbers case is the use of ‘substitution clauses.’ Such clauses enable the individual to substitute themselves with another contractor. Substitution clauses have become prevalent in contracts by companies seeking to establish that their workforce are self-employed in order to avoid liability for holiday pay and other employment related benefits.

These types of clauses can take different forms. The more restrictions there are on the ability to provide a substitute, for example, a requirement that they can only substitute themselves with someone who has been vetted by the company in advance, the more likely it is that the individual is still a worker despite the ability to use a substitute. If however, the vetting is required due to the nature of the job and the individual only needs a specific qualification, for example if the plumber substitute needs to be a qualified plumber then this alone is unlikely to be suggestive that the individual is a worker.

The important thing to remember is that just because a case suggests that someone with a particular job title is classed as a worker, it does not mean that if you have the same job title, you will also be classified as a worker. It depends on various factors that will need to be balanced against each other when looking at the situation as a whole.

Employment status is complex, it can be costly when companies get it wrong and could entitle individuals to additional rights or a payment of monies owed. If you are unsure you should get in touch for specific advice. The Government is currently looking into this area to try and simplify the approach, but until then we must continue to review situations based on their facts.

As a final point, it is important to note that HMRC do not recognise the status of worker and therefore although their decision on your employment status can be one factor in the puzzle it will not be definitive alone.

Please note this article should only be considered guidance and should not be taken as specific legal advice. For further advice on this topic contact Emma Patchett at Taylor&Emmet LLP at Emma.Patchett@tayloremmet.co.uk and 0114 218 4305.

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