The employment status of an individual is important distinction for a business, as different legal rights apply for employees and workers, but not to those classified as contractors or self-employed. However it’s increasingly common for problems to occur when there is a discrepancy between the way an employment status is defined on paper, and how it is managed on a day-to-day basis.
If an employment status is incorrect it could give individuals grounds to claim for backdated pay and benefits, resulting in a significant financial penalty for employers if the claim is successful.
Similarly, HMRC are increasingly focussing on the reality of engagements with self-employed contractors using Personal Service Companies to provide their services for tax purposes, and pursing employers where these arrangements are not truly a self-employed relationship. This means it is important for employers to engage their staff on the correct basis to avoid fines and penalties, which could put their business at risk.
In order to minimise any potential risks and financial uncertainty, it’s important for businesses to review their staffing structures, individual status and terms and conditions of employment.
“Thank you for listening to our issue and offering on-the-spot advice, then further reviewing and guidance – which proved very effective & helpful.”
Principal, Executive Search Consultancy
How Loch Employment Law can help
Our employment lawyers can work with you to identify the right status for your staff to support your business goals and prevent the risk of future disputes, expensive back-pay claims, tax related issues and more. Loch Employment Law can ensure that all roles are correctly defined, and you have the right personnel and contracts in place.
We can also regularly review the employment status of individuals on a case by case basis, ensuring the appropriate classification is updated as roles and working relationships evolve.