It was revealed yesterday that more than 100 estate agents are preparing to take legal action against Purplebricks. Some of those that worked for the online estate agents argue that they are entitled to holiday pay and pension provisions, as they effectively work for the company, despite being classed as self-employed.
This case is the latest looking to emulate successful claims made on behalf of the gig economy, such as the ride-hailing app Uber.
Lee McIntyre-Hamilton, tax partner at Keystone Law, has been advising on employment tax matters for more than 20 years. His expertise covers employer and employee tax compliance, tax on pensions for mobile employees and operating tax equalisation arrangements.
In his latest commentary, McIntyre-Hamilton explains the differences in employment status for tax and employment law purposes. It is arguable that this distinction is often overlooked.
He said: “Following this and other recent high-profile cases, together with the well-publicised HMRC changes to the IR35 legislation in recent years, there is clearly a growing awareness of employment status in the workforce.
“This growing awareness should be heeded as a warning to employers who are deliberately breaching the rules. However, more prominently, it will also no doubt cause concern for many employers who are genuinely trying to comply with the rules but, owing to their complexity and the fact that employment status is based largely on case law, may incorrectly assess the position.
“It is also important in these cases to recognise that there are differences in employment status for tax and employment law purposes. For example, in the Uber case, drivers were deemed to be ‘workers’ under employment law, giving them entitlement to certain employment rights. However, there is no ‘worker’ status for tax purposes and an individual is either employed or self-employed.
“In the Uber case, HMRC appears to be satisfied that, for tax purposes, Uber drivers are still deemed to be self-employed and do not need to be put on a payroll.”