The government is at great pains to points out that tax and employment status are separate. This is why you may have heard the phrase ‘employed for tax purposes only’. What this means in practice is that, from April 2020, if your client decides IR35 applies you will have to pay employment taxes, but you will not be entitled to any employment benefits such as holiday pay.
Sound fair to you? No it doesn’t sound fair to us either.
We believe the government is being naive on this. If an individual is told they’re ‘employed for tax purposes’ it’s obvious they will want to explore whether that means they are entitled to employment rights. And we believe an employment tribunal will often find that they are.
If clients are going to say the engagement has characteristics which are consistent with employment (and therefore determine that IR35 should apply) then they may be opening themselves up to employment rights claims. In short, we think clients should be aware they have skin in the game.
In 2018 IPSE helped IPSE member, Susan Winchester, make a claim for holiday pay. The client, agency and umbrella in the chain settled the full amount being claimed. The client in this case, by the way, just happened to be HMRC.
Read more about Susan’s case here
If you are considering a claim for employment rights, let us know – we may be able to help.
- Fighting IR35
- What's wrong with IR35?
- IR35 Defence
- IR35 news