Employment law: do you know where you stand?

28th April 2017

Employment law: do you know where you stand?

Do you know if you are an employee, a worker or a self-employed contractor? It may not seem important but when it comes to tax and employment rights, there are significant differences.

In an attempt to clarify the definitions, HM Revenue and Customs (HMRC) has launched a new online employment status tool, which provides organisations with an answer based on a series of questions.

It comes in advance of new rules for intermediaries, introduced to the public sector this month, which shift the responsibility from individuals to employers for ensuring that people who work via a limited company pay the right level of tax and national insurance.

However, concerns have been raised that the tool is unreliable, inaccurate and could cause confusion, particularly for those who work in the so-called ‘gig economy’, where people are employed by companies on a job-by-job basis.

While the tool can provide an indication of how a person should pay tax, it leaves unanswered the question where someone stands in relation to their employment law rights.

That has to be worked out separately, based on factors including:

– the extent to which the person is under your control
– whether they have to do the work personally
– whether you have to provide work, and whether they must do it.

What’s the background?

HMRC released the online tool in March as a way to help organisations decide whether public-sector workers fall under the IR35 intermediaries tax legislation.

The legislation was introduced at the turn of the century to prevent workers avoiding employee income tax and national insurance contributions by supplying their services through an intermediary and paying themselves in dividends.

However, the Government has long had concerns about widespread non-compliance with IR35, meaning that, over time, further layers of legislation have been added. The latest change, which came into force earlier this month, is in relation to public sector employers that contract with personal service companies (PSCs).

Public sector employers that contract with PSCs for the supply of workers will now have to consider the nature of the engagement and, where applicable, deduct employee tax and national insurance contributions (NICs) from the payments they make to the PSC. The public sector body will also be responsible for employer NICs in place of the PSC. Previously, responsibility for paying the right level of tax and NICs has always sat with the individual themselves.

Why the concern?

IR35 is a complex issue. It takes expertise and the ability to look at each case individually to be confident of an accurate decision.

Critics of HMRC’s new tool are concerned that such a one-size-fits-all approach can be unreliable and fails to fully answer the question.

Currently, employment law recognises three main statuses under employment law – employee, self-employed and worker – whereas tax law only recognises two: employee and self-employed. As a result, it is possible for HMRC and an Employment Tribunal to come to different conclusions in the same case.

How can Gotelee help?

Employers, more than ever before, need sound and clear employment law advice to help them to protect their employees when things are going well and to protect themselves when relations break down.

Our specialist Suffolk solicitors, based in Ipswich, Hadleigh, Felixstowe, Woodbridge or Melton, act for businesses large and small in Suffolk, Essex and further afield.

To find out more about how we can help you, contact us on 01473 298126 or email andrew.west@gotelee.co.uk.

Blog Posts

Successful claim against Norfolk and Norwich Hospital Trust


We have successfully settled a claim for a Client blinded in one eye as…

Read More
Upcoming Events

Managing the workforce in 2019


If you employ staff or have responsibility for HR, Gotelee Solicitor’s annual employment law…

Read More
News Posts

New Solicitor strengthens commercial property team


Gotelee Solicitors LLP are pleased to welcome Karol Schlesinger to the commercial property team.…

Read More


"Jade made the process of buying our first home quick, easy and took the stress out of a new chapter of our lives"


"Domini was very fast and efficient in carrying out her work for me - she was also very good at explaining things to me"


"I have used Tracey Laflin at Gotelee on a number of occasions and in my opinion, she is simply the most efficient conveyancing solicitor I have ever worked with. From the outset, she took the time to understand my specific business requirements and to date, she has exceeded all of my expectations."

- Dale Fiddy - Portobello Developments Ltd

"We were very pleased to have Jade as our solicitor, the service was excellent and we felt kept in the loop which minimised stress"

- CT

"I would like to say thank you for your help, support and guidance over the last two and a half years. Obviously should I need further assistance in the future I shall not hesitate to call you guys."


"I don't think this house sale would have pulled together without Jo's determination and expertise. Excellent!"

- MT

"Approachable, very efficient, always willing to take my calls and update me."

- SH

"Jade Shelton was absolutely fantastic!! Professional and proactive at all times."

- JH

"“ This is the second time we have used Tracey for the conveyancing to buy our new home. She is always completely approachable, she has helped us along the way with advice and useful tips that has helped lessen the stress. We have complete confidence in her and would not hesitate to recommend her to our friends and family”.  - Peter Dawes, Cater Dawes Financial Planning "


"The ease that we could access and speak to Pat Smith - Thank you"


Please select preferred method of contact

* We will only contact you by telephone if you select this as primary form of contact. All web enquiries will be stored on our website for 30 days.