This appeal serves as a stark warning to businesses that use self-employed need to be vigilant in ensuring that they understand the consequences of getting the status right. In addition to the tax implications employees have many rights that do not apply to the self-employed such as
- National Minimum Wage
- Minimum paid holiday
- Notice periods
- Maternity pay
The tax consequence alone of getting the status wrong can be significant. Firstly, there is the Employers NI that should have been paid on salary. Secondly, the employer will be asked for the Employees NI and tax that should have been deducted, even if the self-employed person has accounted for tax already.
If you need help or have questions see our Employer Compliance Manager, Paul Chappell's blog on self employed status.
As for the case itself
HR Magazine reports:
Nadine Quashie, 28, worked as a 'lap dancer' at Stringfellows between June 2007 and December 2008, and was treated by the club for tax purposes as self-employed and in one tax year earned over £100,000.
She had earlier brought a claim to an Employment Tribunal which was unsuccessful as the judge ruled she was not an employee. Now, she has been allowed to proceed with an appeal arguing that she was an employee and not self-employed.
Peter Stringfellow has said he will challenge this recent decision.
If Quashie's appeal succeeds it will have ramifications for Stringfellows and the nightclub sector in relation to their legal obligations to dancers and other entertainers and potentially to all businesses using self employed workers.
Irrespective of the final outcome, the case serves as a reminder to all businesses of the important differences between employed and self-employed status and the financial consequences which result.
If someone is employed they have a multitude of legal rights including: minimum wage levels; minimum periods of paid holiday; minimum periods of paid notice and maternity pay.
Self-employed individuals however have none of these rights. Importantly, neither do they have the right not to be unfairly dismissed.