to not pay my employee annual leave?

[ISnappedAndFarted]

I run a small online business which, due to my FT job, I cannot run myself. It has premises which I'm tied into, so I can't just give it up, plus it's my baby so I don't really want to.

An old colleague of mine offered to step in whilst I'm away and she now freelances for me, running the business.

I wanted to employ her outright (ie. get PAYE registered etc) and have employee insurance etc however she wanted to be self employed and so invoices me each month for her pay.

I've found out that she's also claiming benefits and is not declaring the money I pay her - she is claiming housing benefit and PIP, possibly others but I'm not an expert.

She is going away in a week for a holiday and obviously won't be in the office for this week.

I have calculated her hours for this month and messaged her to invoice me for that total.

She is saying that she wants to work the hours she would usually be doing in the week she's away, but the following week - so doing 0 hours one week and double the next, to make up the missed hours.

Except the nature of the business means that there will not be a need for her to do double the hours in that week. She'll just be sat there.

I'm having to make continguencies for her being away for that week that will be affecting business income, which is completely fine as obviously she can't work endlessly.

I've told her that she's not needed for double hours and whilst she's welcome to take the week off, as she's a freelance employee she isn't entitled to annual leave. She is not happy with this and wants me to either pay her for that week, or allow her to do the extra hours.

AIBU?

Obviously if she were a permenant member of staff, I'd have to pay her annual leave etc but it was her choice not to be.

[ISnappedAndFarted]

Just to make it clear, my business is above board and I've spoken to my accountant to make sure that from my side i'm doing everything legally - I absolutely am not avoiding paying employers NI etc. The original plan was to employ her through PAYE.

[Shoppingwithmother]

Yes, you are right - don’t pay her for that week

[MishMashMosher]

YANBU she can't have it all.

[Sugarplumfairy65]

You may find that you are breaking the law with your self employed arrangements with your friend. Did you contact HMRC to check that this was the way to do it?

[Singlenotsingle]

As you know, it depends entirely on whether she's an employee or not. She can go to Employment Tribunal for an assessment and declaration at the end of the day.

[JensenElephant]

You don't pay a freelancer holiday or sick pay. They build it into the rate that they charge you.

[Nellyelora]

It's not entirely clear if she's an employee or self employed. Unfortunately it's not as simple as the worker just deciding what they'd prefer to do.

But as a general rule a self-employed person is not entitled to annual leave neither can she insist on working more the following week.

An employee is entitled to take and be paid for annual leave.

Tbh, I'd take legal advice it's a very grey area and can have serious repercussions for employers (see recent pimlico plumbers/uber cases).

[joangray38]

You are allowed to work and claim PIP.

[Fiffyshadesofgreymatter]

She can't have it both ways. You might end up losing her as a freelancer if you stick to saying no but out of principal, I would lose her and get someone else in.

[ISnappedAndFarted]

She is defined as a Freelancer/Self Employed.

She is contracted to work for a set period whilst I'm away and chooses when she works her hours and how. She has a "contract for service" rather than an employment contract.

Up until recently, I was under the impression she was declaring her income on her tax return but now I know she isn't.

I told her at the time of working out our agreement that she needed to declare her income etc. I pointed her towards HMRC and offered to help her with her tax return.

I guess I feel bad because I know she's not got a lot of money and I feel a little responsible for her (she's quite young for her age)

[bert3400]

If she is self employed you do not have to pay holiday pay or for her week off. She should also be working for other companies if she is claiming to be self employed
, if she is only working for you HMRC will possibly investigate her as she should be in PAYE. She sounds like a CF to be honest .

[greendale17]

Self employed/ freelance workers don’t get paid annual leave.

[ISnappedAndFarted]

joangray38 I may have got the name of the benefit wrong then. She's claiming something like that but she has told the council (?) she cannot work due to illness - so whatever that benefit is. I know very very little about the benefits system I'm afraid.

[ISnappedAndFarted]

Self employed/ freelance workers don’t get paid annual leave.

This is what I've told her but she's making me feel really guilty about it.

[Nellyelora]

Legally there isn't a set definition of employee/worker/self employed - it entirely depends on the facts of each case. Just because someone says they are self-employed and has a contract to say that doesn't mean a Tribunal could find they were actually an employee. However, let's say hypothetically a tribunal found her to be a self-employed she would NOT be entitled to holiday pay from you and not entitled to work extra hours and be paid by you (in any event, an employee doesn't have a legal right to choose to work extra hours).

I don't know about the tax implications if you are aware she isn't declaring income. Like I said, I'd take legal advice.

[Returnofthesmileybar]

Nope yanbu, stand your ground or it will be the same for every day off she takes off, then before you know it it will be sick pay as well

[Nellyelora]

Sorry, couldn't find her to be an employee

[GiraffeObsessedBaby]

Nope. No holiday pay she can't have it all. Either get payed properly as an employee through PAYE or you build the others into your rate. My husbands a contractor and he could even take time off when our son was born as we couldn't afford it. Unfortunately that's the life of a contractor/freelancer.

I suspect she didn't want to be a paye employee as this would automatically stop any benefits that she shouldn't be claiming

[ThereHasToBeATwist]

Is she wants holiday pay, sick pay and a pension, she needs to an employee.
She's chosen not to be, which is fine, but she can't have it both ways.

[MaverickSnoopy]

Someone self employed does not accrue annual leave so YANBU and she can't force you to give her the extra hours.

However she can't just decide that she is self employed. My understanding is that to be self employed you should be working for more than one person. This online employment status checker will help you to determine whether she should be classed as an employee or not www.tax.service.gov.uk/check-employment-status-for-tax/setup. I used to use this when contracting freelancers (for a very large organisation).

You are in a very precarious position because you can get into trouble if you are not paying her PAYE when you should be. However she is also in a precarious position if she is not declaring her income. You do however want to make sure you are doing everything properly.

My advice would be to check again whether she should be PAYE and if she should then to suggest to her that you change her employment status and pay her holiday pay.

[TheSmallAssassin]

There's an (anonymous) gov.uk checker here to see if she really should be classed as employed or not www.gov.uk/guidance/check-employment-status-for-tax

If she really is giving you a service then I think she can choose when to do it.

[TrippingTheVelvet]

I wouldn't pity her. If she's trying to cheat the system, she has more money than the 1000s of honest individuals that pay their tax.

[ISnappedAndFarted]

There's been a few other issues but unfortunately I would really struggle to replace her as the job isn't straight forward so employing someone at this point would be next to impossible - I don't have time to hunt for an employee, and certainly don't have time to train them. I've spent the last 3 months training her.

[Highheels1]

I have been freelancing for 10 years and it is unheard of to be paid for holidays or when sick/not working.

[ISnappedAndFarted]

Thank you both for the links, looking now