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Self-employed can claim employee rights

The Court of Appeal's recently delivered unanimous decision could help some individuals looking to claim unfair dismissal. 

Two employees who had wrongly been treated as “self employed” for tax purposes were not prevented from claiming unfair dismissal despite claims by their employers that the contracts were illegal due to tax avoidance. The right not to be unfairly dismissed, amongst other employment rights, is one only available to those you have employment status.

The Court decided that an essential element of illegality is the misrepresentation of facts.  There must be some attempt to conceal the true facts of the relationship before a contract is rendered illegal; despite these employees participating in the misrepresentation of their employment status they were deemed not to have to lied to HMRC about the basic facts.

The mere fact that the relationship between the employer and the employee had been wrongly characterised as self employed did not necessarily prevent an employee subsequently claiming having been an employee and thus, pursuing an unfair dismissal claim.

The Court’s decision acts as a reminder that simply because a worker is categorised as ‘self-employed’ due to the inherent tax advantages, does not necessarily preclude them from claiming the rights of an employee.

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Notes to Editors

Pearson Hinchliffe Commercial Law is a commercial law practice providing a range of legal service to business and commercial clients in Oldham and across the North West. The firm's specialities include Company & Commercial, Employment Law, Commercial Litigation and Commercial Property matters.

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