According to a Report published by the Office for National Statistics (ONS) in 2014, self-employment in the UK is at its highest point for 40 years, with 4.6 million people who were self-employed in 2014. There were an additional 356,000 persons who had a second job in which they were self-employed. According to the Report, the top three job roles for the self-employed in 2014 were construction and building trades (167,000), taxi drivers (166,000) and carpenters and joiners (144,000), so the construction sector arguably has more self-employed than any other sector.
As from 1 October 2015, many self-employed became exempt from health and safety law as detailed in the Health and Safety at Work etc. Act 1974 (General Duties of Self-Employed Persons) (Prescribed Undertakings) Regulations 2015. In this feature article, Andrew Christodoulou outlines what these changes mean to those self-employed persons working in construction and takes a look at what is meant by being a self-employed person.
Defining what is meant by “self-employed” is a complex issue. By virtue of Section 53 of the Health and Safety at Work etc. Act 1974, the term means:
“an individual who works for gain or reward otherwise than under a contract of employment, whether or not he employs others”.
The term “contract of employment” has not been comprehensively defined either in legislation or case law and over the years Courts have developed various tests to determine whether someone is self-employed or employed. A contract of employment is also known as a “contract of service”, as opposed to a “contract for service” under which most contractors are appointed.
At one time, the difference between contract of service and contract for service was based on the ability of an employer to tell a worker how to do his or her work and was influenced by the term “servant”. Now the courts tend to use and give weight to numerous factors.
According to the HSE, relevant factors to consider in relation to a contract of employment may include the following.
According to HMRC:
”You are probably self-employed if you:
HMRC have also developed an Employment Status Indicator on its website to help people decide on their employment status.
What constitutes self-employment for health and safety purposes may differ from that for tax purposes. In a Parliamentary Briefing Paper (Number 000196, 8 July 2015 Self-employment in the Construction Industry) the paper refers to “the scale of false self-employment” in the construction sector. This refers to individuals taken on the basis that they are self-employed, but are actually working under employment terms. There may be advantages for employers classifying workers this way, for example they may avoid being charged National Insurance contributions on the earnings they pay. There may also be advantages for individuals who may make an income tax saving.
In summary, what is a self-employed person is dependant on a number of factors which have to be carefully considered. In In summary, what is a self-employed person is dependant on a number of factors which have to be carefully considered. In Market Investigations v Minister of Social Security (1969), Cooke J said on this issue (1969), Cooke J said on this issue:
“the fundamental test to be applied is this: ‘is the person who is engaged himself to perform these services performing as a person in business on his own account?’”
Perhaps this statement is good starting point on deciding self-employment versus employment?
The Health and Safety at Work etc. Act 1974 (General Duties of Self-Employed Persons) (Prescribed Undertakings) Regulations 2015 came into force on 1 October 2015 and say that health and safety law will only apply to the self-employed if:
The following work activities are listed in the Schedule.
Consequently, those self-employed persons working in construction will not be exempt from health and safety legal requirements. Those self-employed not involved in activities listed in the Schedule will have to be able to justify whether or not their work poses a risk to others, and this can only be achieved by considering the risks associated with the work and by performing assessment of those risks.
HSE estimates that health and safety law will no longer apply to 1.7 million self-employed people such as novelists, journalists, graphic designers, accountants, financial advisors and dressmakers.
The new requirements, as contained in the Health and Safety at Work etc. Act 1974 (General Duties of Self-Employed Persons) (Prescribed Undertakings) Regulations 2015, will have limited or no effect for those working in construction. What remains, though, is the age-old issue of those in the construction industry who consider themselves as self-employed but are actually employed in the eyes of the law. The issue of what a Parliamentary Briefing Paper has called the ”false self-employed” will no doubt continue.