I have been made aware that we have a kitchen porter that invoices the company and has been doing so for the last few months. The Head Chef has agreed with this arrangement. He says it makes no difference that he is relatively low-skilled; it is common in the industry.
Peter replies:
There are a number of tests that collectively indicate if someone is self employed or an employee. These include the ability to substitute, control over tasks, use of equipment and materials etc., supervision, other jobs, regularity etc.
In principle it “could” be legal to engage an individual on a self employed basis to provide low level catering or waiting activities if they have their own business hiring themselves or others, out for these tasks but it’s highly unlikely in reality.
HMRC produce a very simple checklist that guides you through this, albeit an Employment Tribunal could easily come up with a different decision and the checklist is just a guide to help you decide from a tax and national insurance perspective.
It is not unusual for people to be happily self employed until something goes wrong with the working relationship. At that point they could well claim that they should have been classed as employees, or, at the very least, they should have been treated as workers, able to claim the minimum wage and paid holidays.
Courts have ruled that the intention of the parties is not the main determinant of a person’s contractual employment status, and that whether someone is employed or self employed is a question of fact for a tribunal to determine. Tribunals will look at the reality of the working situation. In this case the Kitchen Porter will have largely been controlled by the Head Chef determining the what, where, when and how the work is done. Therefore, the Porter is almost certainly an employee and you risk a hefty fine and extra attention from the HMRC if you are ‘caught’ paying him this way. Even if he is not an employee he may well be a ‘worker’ as highlighted in numerous recent court cases such as Uber, and is therefore entitled to holiday pay and possibly other benefits.
You must tell the Head Chef that the current arrangement cannot continue from an employment law or HMRC perspective. The Porter should transfer onto your payroll and if they are not happy to do so then they may decide to leave but at least you are not storing up serious problems for the future.
The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for specific advice.
