Employers who require a supply of flexible labour may engage agency workers, casual workers and, frequently, independent contractors. For the individual, there are certainly tax advantages in being an independent contractor rather than an employee. The UK government is keen to ensure business retains this flexibility to remain competitive, but is also concerned that individuals’ rights are protected from abuse from unscrupulous employers. The courts have demonstrated a willingness to preserve this balance by looking behind the company-drafted documentation, which purports to preserve self-employed status, to the practical reality of the situation (which might indicate otherwise). The lure of better rights set against the lack of job security for independent contractors sometimes means that an independent contractor will challenge their employment status in the
employment tribunal, even if this might risk their self-employed tax status. We have seen in this chapter that there are a number of criteria, which have been developed by the courts to determine employment status and although recent case law has emphasised the importance of looking at the reality of the relationship, it still remains of the utmost importance that the relationship is properly documented. This will not be decisive in determining status, but it can tip the balance if the situation is marginal.
**This chapter is up to date as of March 2017