OT: Employees and the snowflake generation

[Dave Plowman (News)]

I'm surprised you mix with such people to know them so well.

[Andrew]

But how many of the traineees were taken from the general public, as opposed to the main criteria which was having someone already working for the BBC ?. Ditto Tube drivers, Dockers, etc.

[Andrew]

Soldering, (or trying to) using a reel of tinned copper wire has probably caught out everyone who ever soldered up any circuit board.

[Andrew]

I was an IT contractor when IR35 came in. My accountant said I was 'in' and that was that, but several fellow contractors went down the 'IR35' friendly contract route and none were challenged by HMRC for the next 7 years or so.

It is only in recent times that the press has cottoned on to all the 'disguised' employees in the NHS, civil service, MOD and elsewhere that HMRC have got their act together.

[Dave Plowman (News)]

I joined the BBC direct from school. And I can only think of one of my contemporaries (the big expansion for BBC2) who had transferred from another BBC department.

[charles]

I spent 3 years at university learning and practicing stage lighting - other did the same.

[charles]

I did have one colleague whose father had worked for the BBC -- but only the one out of hundreds that I knew.

[Brian Reay]

I?ve been funding them for years, even now I?m retired.

[Dave Plowman (News)]

Has stage lighting much in common with that for TV?

[charles]

you need to light the actors and the setting - that's the same - how you do it differs.

[John Rumm]

For certain values of getting their act together. They routinely lose most of the cases they fight (and one presumes they are selecting to fight just the ones they think are "sure things"). Which really just highlights they don't understand how their own rules. Now they want to delegate the interpretation of them to private sector employers as well

- supported by a status assessment tool they they know does not work and comes up with the wrong answer more often than not!

[Dave Plowman (News)]

I remember when it came in for broadcasting. Some freelance could be so called self employed - others has to be on PAYE. Sort of depended on the particular job, and pretty arbitrary.

I used to work sometimes in one, sometimes in another. All made work for my accountant.

One of the guidelines made be laugh. Do you define your own working hours? Very very few in broadcast did.

[Robin]

That sounds more like the guidance the Inland Revenue negotiated with the industry after the Hall v Lorimer decision in 1993 on employed/self-employed rather than IR35 as such.

[Dave Plowman (News)]

Ah - I assumed IR35 grew out of that?

[Robin]

Not really. IR35 was more a response to the massive growth in use of companies (both by employees and the self-employed). Lots of reasons - eg various tax savings, NI savings (for employers too), limited liability[1], "employer" free from pesky employment laws[2] - and a temporary but substantial fillip from the daft idea of a nil rate band of corporation tax[3].

[1] ever more useful with tougher consumer protection laws [2] ever more useful with all that stuff about "workers", WTD etc [3] it's telling when the professional accountancy bodies response to Gordon Brown's Budget announcement was a coded "are you joking? you do know loads of people will incorporate just to avoid tax?"

[John Rumm]

Much of the difficulty, is that there is no definition in legislation of what it is to be employed or self employed, it has always fallen to the courts to make a decision. Hence to decide if a particular engagement should be treated of one "of service" (i.e. employment) rather than "for service(s)" comes down to weighing the particulars of the engagement against a body of case law that has built up over the years (including Hall v Lorimer).

This needless to say gets complicated - and much of the case law is from industries and times completely unrelated to modern work. (e.g. having to provide your own tools, would be a pointer to self employment, but would make little sense in the performance of your job as a contract computer operator).

There are *many* factors that the case law highlights as being significant, including:

Is there a requirement for personal service (i.e. is the worker able to send a substitute)

Being exposed to financial risk (e.g. having to correct errors etc at your own expense, being paid on invoice as a creditor rather than salary as staff)

Being under the direction and control of the engager (i.e. can tell you just want they want done and to what standards, or, can they also tell you how to do it?).

Being part and parcel of the organisation of the engager - this can be anything from receiving staff benefits, paid leave etc, to having appraisals / salary reviews, access to staff pension, needing to attend staff meetings etc.

Using your own equipment / premises, and or being "in business on your own account" (i.e. having a business like structure and approach to the work, plus the accoutrements of a business - like office equipment, advertising, headed note paper etc).

Mutuality of Obligation or "MOO" (i.e. Whether an engager is obliged to offer more work when the initial work is done, and whether the worker is obliged to accept it if offered, whereas this is not the case with a contractor).

The intentions of the parties.

What it says in the contract.

What it actually done if its different from the contract.

and so on - there are others. But hopefully even from that short list you can see that many of the tests are very nebulous and not applicable to all trades.

That is them made massively more complicated by the IR35 legislation that attempts to "look through" the contractual relationship and construct its own "deemed contract" in place of the real ones, and base a decision on that. This is particularly difficult where there are multiple parties in an chain - say "employer", agency, contractor, (and possibly sub contractors etc), and finally a worker. The worker will need to try and construct this deemed contact based on all the contracts in the chain - most of which they are not allowed to see. The deemed contract will also be based on actual practice, and things like interviews and descriptions of staff at various levels in the intermediate organisations that again the worker will not see or necessarily even know. Their employment status could even be decided based on the word of a HR droid, that knows nothing about the department, the work, or the worker, or how they were engaged or work together.

Now at the end of all that, you are only half way there. That is how you decide what your employment status is for the purposes of taxation. This is actually subtly different and separate from your employment status regarding employment law. Hence you can find yourself in the unfortunate position of being self employed from a employment status point of view (i.e. no benefits, sick leave, holiday etc), but an employee from the point of view of taxation. (note the reverse is also possible).

[The Marquis Saint Evremonde]

John Rumm [e-mail] posted

This is where the authorities - and HMRC in particular - continue to refuse to resolve the issue. What is needed is an independent body to address the questions "What is the true function of the distinction between employment and self-employment? and, Having pinned down that function, what are the appropriate and fair desiderata to be applied to categorise each case as one or the other"?

This question cannot honestly be addressed by HMRC or any of its appendages (like the Office for Tax Simplification), because HMRC wants everybody to be put onto PAYE and employee's NICs; so naturally it wants everybody to be classed as employed, and will invent criteria designed to achieve that purpose as far as possible.

An independent body would balance that against the need for fairness to individuals, in particular that the situation you describe (employed for tax/NIC purposes and self-employed for benefits purposes) should never occur. And the obvious implication of that, is that the real function of the distinction between employment and self-employment is to decide who accepts responsibility for the worker's welfare when he is not working. If it is the person who pays him for his work, then he is employed; if it is himself, then he is self-employed.

The infliction of PAYE should follow that decision, not lead it. But of course the Treasury would never accept that. It would lose them both money and power.

[Dave Plowman (News)]

And on the other hand, many employers would love to be able to classify employees as self employed. My guess is there are far more in this position than the employed wanting to be self employed.

Being self employed does have advantages if you can make half decent money. But not for the low paid.

[Andrew]

IR35 came from Australia, where a similar law was enacted.

[Andrew]

You need to go back to about 1976 for that, when the definition of 'self employed' was tightened up.