Can someone trading through a PSC claim employment rights from an engager?

A very interesting post on AccountingWeb.

Among other cases referred to in the article, in 1994, a disgruntled individual, who was providing their services through a limited company or PSC, brought a claim for unfair dismissal.

In Catamaran Cruises Ltd v. Williams [1994] IRLR 386 EAT, The Employment Appeal Tribunal (EAT) stated:

“There is no rule of law that the importation of a limited company into a relationship such as existed in this case prevents the continuation of a contract of employment. If the true relationship is that of employer and employee, it cannot be changed by putting a different label upon it.”

The EAT continued: “In our view, it is a question of fact in every case whether or not the contract in question is one of service or a contract for services. We accept that the formation of a company may be strong evidence of a change of status but that the fact has to be evaluated in the context of all the other facts as found.”

As AccountingWeb concludes…

“There are obviously judgments to counter this argument that a PSC may be able to get employment rights but, these cases are persuasive. However, what has a contractor got to lose, now that taking a case to the employment tribunal is free?”

For me, there’s another question though. HMRC would probably have something to say about someone who has proved to an Employment Tribunal that they are an employee while also having convinced HMRC otherwise… but perhaps IR35 makes this the engager’s problem…?

Usual footnote: The information that this blog provides is only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, and it should not be used in place of professional advice.

This entry was posted in Employment Law and Rights, Employment status, Freelance working, Freelancer rights, IR35, Personal Service Companies and tagged , , . Bookmark the permalink.

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