A court just ruled these 400,000 precarious workers may be entitled to employment rights

Almost half a million ‘bogusly self-employed’ people may be affected by a ruling by an employment appeal tribunal today.

In a case that could affect up to half a million workers, a man who was treated as self-employed by a staffing agency should have been given employee status and been entitled to workers’ rights, a court ruled today. 

An employment appeal tribunal ruled today that Russ Blakely who was treated as self-employed by his company was in fact an employee and had been denied holiday pay.

Blakely, a pipefitter who worked on hospital redevelopment project in Berkshire, was charged £725 in employer’s national insurance contributions and £324 in management fees by his payroll company, whilst the company refused to pay him holiday pay, claiming he was a self-employed contractor.

But the employment appeal tribunal ruled that Blakely was a worker because he had a contract and the use of a payroll company did not circumvent this relationship.

The decision of the court is binding on all employment tribunals and must be applied in other cases, so could mean better working conditions for hundreds of thousands of ‘bogusly self-employed’ people – who lose thousands of pounds a year in employee benefits denied to them.

As many as 460,000 people may be ‘bogusly self-employed’, missing out on employee rights such as holiday pay, sick pay and pensions worth up to £1,200 per worker per year, according to some authorities.

The case was fought by Unite the union on behalf of pipefitter Russ Blakely against employment agency On-Site Recruitment Solutions Limited and payroll company Heritage Solutions City Ltd, who owed Blakley £1,453 in holiday pay when he was dismissed.

The court ruled that:

  • When determining whether there was a contract employment tribunals must consider the intentions of the worker and all surrounding circumstances, not just the intentions of the employer.
  • There was a contract between Mr Blakely and On-Site (the agency) and the use of a payroll company did not circumvent this relationship.
  • Mr Blakely (and therefore other agency workers being paid through payroll companies) could be a worker of the agency, the payroll company or both. The possibility of being a worker of more than one body provides the opportunity to dramatically reduce the amount of umbrella/payroll company rip offs.

 Assistant general secretary of Unite Howard Beckett, who fought the case on behalf of Blakely, said:

“This is a groundbreaking victory against bogus self-employment in construction and other sectors.

“It blows a hole in the way that employment agencies hide behind payroll and umbrella companies and pretend that they are not responsible for the employment of the workers they recruit.

“This decision sends out an unequivocal message to all those involved in bogusly self-employing workers, Unite and our Strategic Case Unit is on your case.

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3 Responses to “A court just ruled these 400,000 precarious workers may be entitled to employment rights”

  1. Michael

    Thank God!!!
    I was told, some years ago, by HMRC, in 2001, to be precise, if the employer pays your National Insurance for you, and your Income Tax, they are employing you. This was concerned with an agency, and consequently, I refused to work for them

  2. Lawman

    This is excellent news. HMRC (rightly) has guidelines for what is genuine independent trading as a company or self employment: to prevent evasion of taxes and NIC by artificially creating an independent contractor.

    This concept should be applied, and extended, to prevent businesses with high bargaining power evading taxes and employer liabilities by, similarly, artificially treating staff as independent contractors.

  3. Das

    Another grey area being totally missinterpreted.
    When the inland revenue started the construction industry scheme I too attended the meeting at the tax offices. I explained to deaf ears that the way forward for subbies and contractors was finding their businesses like an agency. You employ yourself through your own agency so the contractor has to be invoiced for the whole ammount without deductions for national insurance and income tax.
    This is how I came to run a highly profitable driving agency.
    At one time advised to have to buy a licence to trade as an employment agency and business. This ensured we did not break any rules like try to fill jobs that are under a trades dispute. Something that even union’s did not know about. Sadly Thatcher removed the nescesity to buy a license and this started the downward trend we see today which tends to replace smokers with agency employees albeit at a higher cost to the taxpayers.

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