Self-employed rights to claim notice, holiday and redundancy pay

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If you’re self-employed or freelance, what are your rights to claim notice, holidays and redundancy pay? Sherreene Cheah from Tilly Bailey & Irvine Employment Law Solicitors explains…

Under the current employment law, there are three different categories of people providing their services:

  1. Employee
  2. Worker
  3. Self-employed independent contractors

This is often the first question one would ask when an employment issue arise.  The determination of an individual’s status is important to understand what rights the individual would have.

There are some fundamental legal protections which only apply to employees and not the other two categories.

By way of an example, an employee has a legal right not to be unfairly dismissed and receive statutory redundancy payment.  A worker

An employee is defined under section 230 (1) of Employment Rights Act (ERA) 1996 as “an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.”

Under section 230 (2) of the ERA 1996, a contract of employment is “a contract of service or apprenticeship, whether express of implied, and (if it is express) whether oral or in writing”.

A worker is defined under section 230 (3) of the ERA 1996 as “an individual who has entered into or works under (or where the employment has ceased, worked under) a contract of employment or any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual”.

The issue of employment status is often both a question of law and a question of fact.  The following are some of the issues the Tribunal would consider when determining the status of an individual.  However, each case would turn on its own facts.

  1. Contract – Is there an agreement of some kind between the individual and the employer?
  2. Personal Service – Has the individual undertook to perform the work or services personally?
  3. Mutuality of obligation – Is there an obligation for the employer to provide work?  Is there an obligation for the employee/worker to carry out the work provided?

There is a recent case which highlighted the importance of the above three questions.  The case was about a hairdresser, Ms Meghan Gorman, who worked under a consultancy agreement with the salon for five years starting as an apprentice in 2013.

Upon qualification, the salon provided Ms Gorman with an “Independent Contract for Services” in which Ms Gorman would be engaged as a “self-employed hairstylist” and not an employee of the salon.  Unfortunately, the salon closed in 2019 and Ms Gorman issued a claim which included notice, holiday and redundancy pay.

In Ms Gorman’s case, the tribunal had considered, amongst other things, that Ms Gorman was subject to strict control by the salon.

She had to work from 9am to 6pm, Monday to Saturday and was not allowed to take holidays without prior approval nor did she have any choice with regards to her clients.

Once the salon allocates a client to her, she is obligated to perform services and in return the salon is obligated to pay her.

If she is unable to work, her clients would be covered by other hairstylists working in the salon.

The tribunal in the first instance held that Ms Gorman was in fact not self-employed but an employee and therefore is entitled to claim for her notice, holiday and redundancy pay.

Our specialist employment advisers will be able to assist you in all employment issues. We are experienced in advising not only individuals but also companies of any sizes. If you have any queries, please contact our north east solicitors on 0333 444 4422. 

Sherreene Cheah
Tilly Bailey & Irvine