Lucy:
I’m not sure if this will help or merely muddy the waters further, but…An awful lot of whether someone truly counts as self-employed comes down to two things: financial risk and the ability to say “no” to a client.I’m self-employed as a freelance journalist. I choose to remain a sole trader, but I could just as easily have a Ltd Company or an LLP, it’s irrelevant.
I work job to job - each brief is a beginning and an end in and of itself and I have no guarantee of earnings beyond that. If I get halfway through researching, setting up, or even writing a job and for some reason it all goes ■■■■ up - something which has happened to me several times - I do not get reimbursed for any time or expense that has cost me, unlike the full time staff writer. Therefore I carry risk.
Am I understanding you correctly that you can be given a brief, perform the work, and then have the brief cancelled without payment? What level of investment might be forfeited in that situation? Is there any obligation on you to actually deliver your brief - could you cancel or fail, without accountability or prejudice to the relationship (such as a creative artist who merely discusses a concept, and says “I’ll have a think about whether I can make it work”)? Also, what are your earnings, relative to the staff writer who carries no risk?
I ask because the “financial risk” test of a legitimate business, to my mind relates to business capital being at risk, not simply the risk of wasted personal time or doing work for free personally (nor the loss of a small number of minor expenses like dinner money or train tickets, which are as congruous with the activity of a work-seeker or employee, as with a businessman). It also relates to whether there is correspondingly an opportunity for an entrepreneurial profit and an expectation (genuine, even if not always reasonable) of sensible return on capital invested.
The risk of payments or wages being withheld is not itself an indication of self-employment (it indicates neither, because both employees and businessmen may be subject to withholding for bad work, and both employees and businessmen may be paid variably by the piece or according to quality).
Also, the risk of loss or the presence of penalty clauses, without the corresponding opportunity for an entrepreneurial profit, is a string indicator of employment and not an independent business, because employers will often try to force such clauses into their contracts by virtue of their power over the subordinate employee, but an independent businessman and customer would not trade on the basis of the businessman accepting a risk of loss without the opportunity of entrepreneurial profit.
If a client asks me to do a job and for whatever reason I don’t want to - already fully booked, away on holiday, think its a crap idea and don’t want my name on it, whatever - I can say “no” and, while it might ■■■■ that client off a bit, they can’t do anything about that beyond not offering me anything else in future. A staff writer, however, would be up on a disciplinary.
But whether employment exists between briefs does not address whether employment exists during a brief. Also, the fact that you mention they could respond by dispensing with your services in future, depending on what level of threat that poses, does not imply a contract in the interstitial periods, but it could go towards showing that authority and control is present in the relationship.
Try applying the above 2 principles to any “self employed” driving job and see how far you get. Is the first scenario something you’d be prepared to take on? The equivalent, I suppose, would be if a load was rejected. Would you be prepared to not be paid for that, or for there to be a delay in payment while it gets sorted out who’s paying for what? What about the second scenario, can you knock back that dodgy Friday job which’ll keep you out until Saturday morning, and for no other reason than because you’re on a promise?
Just food for thought.
Indeed.
I would say the “financial risk” test cannot be usefully applied to truck drivers, because they do not typically supply or stake business capital, or receive an entrepreneurial profit. Any premiums that the “self-employed” drivers receive in this industry are usually attributable to regulatory arbitrage against the PAYE tax scheme and other employment protections, not to any legitimate business activity carried on by the driver, and in general their mode of work is equivalent to that of employed drivers.
And as for deciding when to work, can the driver cancel half way through a job, or half way through a day (for any reason)? Can the hirer do the same? If that is not reasonably anticipated, then there are mutual obligations to work and to pay, at least for the duration of a round trip or other indivisible block of work.
Also, the unfettered right merely to decline further work is not an indication of an independent businessman, because both employees and businessmen always have the right (notwithstanding contractual obligations, statutory minimums, or customary implied terms) to terminate the contract at will.
