southwestsam:
Historically drivers and agencies both benefitted from the Ltd Co. arrangements - drivers took home more as they could claim travel, subsistence and various other expenses (= more take home pay) and the agencies avoided the expensive on-costs associated with PAYE employment.The criteria for whether or not it was/is legit hasn’t changed, but who HMRC can pursue in the event that they deem it to be false self-employment has. In the past, if there was a ‘debt’ accrued to HMRC, the company would fold and HMRC would get nothing/very little. Now, the agency and the company they drive for can be pursued by HMRC so many companies are ‘playing it safe’ by insisting on PAYE either direct or via Umbrella.
Some people will have been duped/coerced into going down the Ltd Co route, others will have gone into it with open eyes. Doesn’t seem right for the latter to start claiming through the courts.
The claim is not surrounding IR35 as this comes under Tax Law, how drivers pay themselves through their limited company is down to them and any approach from HMRC to either the worker or company will be for them to respond and answer.
The claim for drivers is made under the Workers Rights legislation, it matters not whether you are a director, sole trader or self employed as in the eyes of the courts, you are classed as a worker. If you take on a role where you have little autonomy over how you operate and are under some kind of supervision, direction and control then, the company must offer the worker certain entitlements. For a worker that operates in a way that is comparable to that of an employee then they will have a claim for both holiday pay and workplace pension. In cases where drivers have been made to use an Umbrella company they may also have a claim for employer’s national insurance as well.
By insisting workers set up as a limited company or get paid through an Umbrella, the company negates having to pay 13.8% employers national insurance, 12.07% holiday pay, sick pay, maternity pay, workplace pension, paternity pay and apprenticeship pay.
I believe workers have every right to reclaim what they were denied in entitlements, take a look at the Uber Driver case and others that have been won in the courts. Contractors for Justice (C4J) are currently taking action against estate agents that operated in a similar way and they are also looking for contract drivers to join in action against agencies and companies. (See story below)