When does a freelancer become an employee? HELP!

[Limelight]

Hi!

I wonder if someone can help me. One of the organisations I work for is changing the way it distributes work to its freelancers from next year (it has a very small salaried head office team and a veritable army of freelance project managers who do the bulk of the on-site management etc). There is some concern from amongst my colleagues about this and so I wanted to check some facts. Mumsnet (and it's marvellously clever Mums!) seemed like a good place to start!

So essentially they're going to shift over to a tender process (which I don't really have a problem with. It's not that uncommon in my sector). They've also stated that a third of their freelancers will be 'cut away' (their phrase not mine) as part of this changeover. Where I think there might be an issue is that some of my colleagues have been solely working for this organisation, doing this job, for a a period of five/six years plus. I have a feeling that there is a point at which a freelancer is entitled to similar rights to an employee if they're in this sort of situation.

It's possible I'm completely wrong so if the answer is 'you're making this up limelight,' then so be it!

I'd really appreciate your help!

Limelight xxx

It is tricky becasue yes, it is likely that you are an employee rather than a freelancer, but it can be hard to convince your organisation of that!

It might be worth talking to your Job Centre, who will get onto your employer and demand that they acccept that you/they were employees and sort out what they owe you (holiday pay/pension pay/NI contribs).

Basically, if THEY set the hours, which are regular, and they set the tasks, and they are your only client, then basically yes you are an employee (it is more complex than that but that's a vague summary).

Job Centre is a good place to start - they can give good advice about this sort of thing.

Limelight, there is a tool here on the HMRC website which is a series of questions designed to work out whether someone is employed or self-employed so that would be a good place to start.

Whether someone is an employee or not is determined on the facts of an actual situation and relies very much on what actually happens rather than what is meant to happen or what is stated in a contract.

The situation you describe does sound more like employment.

There was a recent case (details here) where a freelancer working through his own Ltd company was able to claim unfair dismissal.

In this case a contractor working through his own company was found to fall under the "IR35" rules which basically means that he should have paid and taxed him self via taking a salary (after 5% expenses dedcution) from his company rather than divideds.

I really would recommend taking some legal advice - and possibly tax advice - you and your collegues need to be clear what the implications of claiming that they are deemed employees are - eg would you have more tax to pay? (hopefully not if you are sole traders - but possibly if you operate through Ltd companies). If you are freelancers you maybe have PI (professional indemnity insurance) and therefore access to a free legal helpline.

If these matters are raised to the organisation then they may feel that they need to take legal advice to protect themselves and may therefore lead to them changing their process and offering "redundancy" payments.