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Self-employment – the biggest workplace issue employers face?

Advice from Michelle Morgan, senior associate at Gardner Leader

Andy Murrill

Andy Murrill


01635 886625

Self-employment – the biggest workplace issue employers face?

Uber, Hermes, Deliveroo, all high profile cases which have at the heart of them the issue of employment status.

The employment status of an individual is important for a number of reasons.

For example, certain important legal rights only apply if an individual is an employee.

The question of whether an individual is an employee is not easy to answer.

The cases regarding employment status go back many years, but it remains impossible to set down a clear set of defining criteria against which an individual’s status can be definitively determined.

The glut of cases over the years, and particularly in recent months, demonstrates just how vexed an area this is, and as such we are waiting with baited breath as to the decisions in the upcoming Uber case and HMRC’s investigation into Hermes.

Hermes investigation

HMRC has decided to investigate delivery company Hermes, after its workers complained of low pay and the misclassification of their status as self-employed.

The investigation comes in light of the allegations made last month, relating to Hermes’ failure to pay its workers the national living wage rate of £7.20 an hour on the basis that it has classified these drivers as self-employed rather than employees.

As self-employed persons, the drivers are not entitled by law to receive the national living wage, nor are they entitled to other employment benefits such as holiday pay, sick pay, pension, maternity leave or the right not to be unfairly dismissed.

The allegations echo recent media coverage of delivery company Deliveroo, and a case involving a number of cycle courier businesses that is expected to be heard at an employment tribunal shortly.

But HMRC’s intervention in the issue of self-employment has been seen as particularly significant.

Hermes has said that it was “confident in the legality of our self-employed courier model” and would “cooperate fully with any investigation, should there be one”. 

But the case serves to highlight the growing challenge for the Government in investigating organisations that have classified
individuals as self-employed, given the uncertainty over this area of the law, and the fact a number of test cases are currently awaiting judgment.

The investigation into Hermes coincides with a separate announcement from HMRC that it would scrutinise employment arrangements relating to freelance workers who were being used to fill what would otherwise have been permanent roles.

If an organisation is found by HMRC to be in breach of existing laws, it could be fined up to 100 per cent of the tax owed.

The Treasury said it is currently owed more than £300m in lost national insurance contributions.

Additionally, the employer could be liable for employment tribunal claims for non-payment of holiday pay, national minimum wage and pension contributions if the status of the individual is found to be that of an employee as opposed to self-employed.

Prime Minister Theresa May recently announced a review of workers’ rights, amid concerns that almost half a million Britons could be wrongly classed as self-employed.

The review will look at whether the national living wage is being undermined, and what changes in legislation may need to be implemented as a result.

As such, it is worth bearing the points raised above in mind if you engage self-employed persons within your business.

By Michelle Morgan, senior associate in the Employment team at Gardner Leader solicitors in Newbury, Thatcham and Maidenhead. Follow @Gardner Leader or contact Tel: (01635) 508080,

Michelle joined Gardner Leader last month and is an employment solicitor with over 10 years’ experience, latterly in a leading national law firm. If you have any questions about employment issues, please contact her.

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