What is false self-employment

Hi I’m Lucy and I founded the British Grooms Association (BGA) 11 years ago because I wanted to make a difference to all the hardworking grooms out there.

Whilst I think we have made big steps forwards in the industry, one of the most frequently asked questions we still get phone calls about is people’s employment status.

All too often people are told they are self employed, when actually they are employed. This can be seen as an appealing option for your boss as they avoid paying your tax or National Insurance. However it’s is illegal and has serious implications for both you and your boss.

What is false self-employment?

One of the biggest challenges faced by the equestrian industry has to be that of false self-employment. This subject matter is one that I feel strongly about as it is illegal and just not fair.

Every survey we run identifies about 30% of respondents fall into this group – this is a shocking statistic. It is however unsurprising to me as I regularly speak with grooms who are in this position, and I understand the direct impact on their earnings, life and wellbeing.

It is, at last, being seen by the industry and HMRC as a problem that needs to be addressed. This is good news and I hope with this increased awareness and education, this too common practice will become a thing of the past.

False self-employment is a term used to describe a business that is disguising employment of their workers as ‘self-employment’.  This is usually to evade paying Income tax and National Insurance contributions and is simply labelling an employee as ‘self-employed’.

What does it mean for the grooms that are wrongly classified?

By being seen as self-employed the worker (groom) has reduced rights and entitlements compared to those that an employed member of staff would receive. This includes holiday pay, sick pay, redundancy and pension contributions.

There are also implications for the groom if they are not paying the correct level of income tax and National Insurance, as this is tax evasion.

The official term used by HM Revenue & Customs (HMRC) is a "disguised employee", which describes individuals who are directly employed by a company, but cheat the tax system by claiming they are a freelance or contract worker. But many would argue that the "cheat" is as likely to be the employer as the individual.

The HMRC have the power to recover any unpaid tax contributions from businesses that are not able to prove sufficiently (with evidence) that they were acting within the regulations and were not making false self-employment claims.

For those yards that were working within the rules, it is now even more important to keep correct records and have proof of the self-employment status of those that completed work for them.

One of the most common sentences we hear at the BGA is, “I was told by my employer that I was self employed.”

For clarification, a self employed individual must make their own mind up on this employment status and then carry out their services in this nature. One of the key elements for identifying correct employment status is surrounding control, here are some examples:
 

CASE STUDY ONE
James offers services to equestrian yards, he has his own price list and advertises online and in local tack shops. He decides when and where he works; he has the right to turn down work. He has multiple clients, some may use him regularly, but they ask him if he is available to come and deliver services. James is a freelance groom. 
 

CASE STUDY TWO
Jenny works at just one yard. She has been told she is self employed. She has no other clients. She is told what time she must start and finish and she has a regular day off. She must ask if she wants to have time away from the yard (ie holidays).  Jenny is not self employed – this is a case of false self-employment.
 

CASE STUDY THREE
Jemima works at Apple Farm 5 mornings a week, and Pear Farm 5 afternoons a week. She is told what time she must start and finish and she has a regular day off. She must ask if she wants to have time away from the yard (i.e. holidays).  Jemima is employed at both yards, she has two employers and has a contract and has her tax and NI paid by PAYE by both her employers. If Jemima was told or decided that she was self employed at either establishment it would be a case of false self-employment.

The three cases above are very black and white and sometimes it might seem a bit confusing. The principles are very clear though, and are explained further in the BGA Members Zone and if you are a member you can contact us to discuss your own situation.