Covid 19: Am I employed or self-employed?

I work for a company that’s just informed me that I don’t qualify to be furloughed as I’m classed as ‘self-employed’. What does that mean for me?* What financial support can I claim?

So far, the Government have not made any announcements regarding additional packages of financial support for all those workers who are not covered by PAYE.

This includes those who are self-employed and who are freelancers – though it may also include those who are on zero hours contracts and agency workers (dependent on their PAYE position).

An announcement that will cover those classed as self-employed is expected on the 26 March 2020. The self-employed and freelance workers are currently (as at 25th March 2020) entitled to apply for Universal Credit – though you do need to check the eligibility criteria.

If you are ill, Employment and Support Allowance is now available from the 1st and not the 8th day. If you have tax liabilities that you know you will struggle to meet due to COVID-19, you can apply to HMRC for Time to Pay arrangements.

You can also access the Coronavirus Business Interruption Scheme to apply for assistance with loans and overdrafts. This Scheme means that the Government will provide lenders with a guarantee of 80% of each loan.

I have been told by the company I work for that I am self-employed – but I don’t understand why they are saying that. What’s the difference between an employee and being self-employed?

The difference isn’t always clear – in fact, battles fought over the classifications have taken up a lot of judicial time – so you must seek legal advice if you are looking for a specific answer to your particular employment status (another good reason to join a trade union!).

However, in general terms, you are self-employed if you run a business for yourself and you carry responsibility for its success or failure. If you are self-employed you will not be paid through PAYE and you do not have the rights or responsibilities of employees. Conversely, you are more likely to be an ‘employee’ if you work under a contract of employment, for ‘an employer’, and that employer makes deductions for tax and national insurance. The employment picture is further complicated by the ‘gig economy’, where workers are treated as contractors who perform bits and pieces of work i.e. ‘gigs’. This has increased the blurring between employed and self-employed.

For instance, zero hour contracts are similar to gig economy work – both sets of workers have no certainty about what they are going to be paid or even if they are going to get any work. But there are differences. Zero hour contracts are still contracts of employment that pay for the time worked, whereas gig economy work involves a company treating a worker as a contractor who is contracted for a specific service or performance of a specific task. The law is continuing to develop in this area – and it is always worth looking closely at your employment status.

We have further guidance for employed workers who might be covered by the Governemnt Wage Support (furlough) scheme here

Acas advice on employment status

Thompsons Scotland free employment rights advice talk@talktothompsons.com

*Nothing on our site or provided in any email response to an individual enquiry, constitutes legal advice or is intended to give rise to a legal relationship between the STUC and any individual. Specialist legal or other advice should always be sought and taken in relation to your specific circumstances. The contents of our site and/or this email are intended for general information purposes only and you should not rely on them as definitive in relation to your situation.

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