Thompson v Paymaster

A recent employment tribunal found that six workers paid by the now gone bust Paymaster were not in fact considered to be the umbrella company’s employees.

Clearly this immediately raises questions in relation to the treatment of workers employed through umbrella companies, but before we all get carried away, we should understand some of the facts behind the case and why the judge took that decision.

Firstly the umbrella company in question operated a “pay day by pay day” model, offering no employment in between pay days and therefore no ongoing employment rights.

This is not how compliant umbrella companies work and I can only assume it is one of the reasons that Paymaster ceased to trade.

Secondly the six workers, who were owed payment when Paymaster went into receivership, were not represented and were asking the tribunal judge to ask the secretary of state to pay the unpaid remuneration, in line with Section 182 of the Employment Rights Act. Under normal employment this would be the case, however, due to there being no control through obligation on either party, the judge ruled that they were not in fact employees.

So how can agencies ensure that their umbrellas are compliant once again? Unfortunately it comes down to understanding the umbrella’s actual model and asking for clarity. Additionally, an umbrella which is a member of a professional body such as Professional Passport would be audited to ensure that they do employ workers compliantly.

Within my companies – Atlantic Umbrella and Crystal Umbrella – we take the employment of contractors seriously. We have an in-house HR department and provide all employment rights regardless of whether the worker is on assignment or between and therefore working under mutual obligation and a truly overarching agreement.

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An employee or a freelancer? Inconsistency at the BBC

It’s funny that contractors seem to be getting all the headlines, even when the US election was going on.

So the BBC has undertaken a review of its 2,400 workers who had “off-payroll” arrangements, with some 800 earning over £50,000 now having to undertake a business entity test to ensure that they are legitimate freelancers, and 131 of them likely to be offered permanent contracts.

Interesting that only the higher paid workers have to do this test. Why not all workers?

I would have thought that the lower paid workers would be more likely to be caught by IR35, as the business entity tests revolve around control and supervision. After all, the higher up the earning chain, the less control and supervision you would get.

Danny Alexander said: “It’s essential that the public has confidence that publicly funded institutions have in place arrangements to ensure their staff pay proper tax.”

It would seem he’s now getting his wish, but aren’t the government missing a trick?

With the BBC admitting that its payroll arrangements are ”inconsistent”, resulting in on-air talent doing similar work but being classed as staff, self-employed or contracted through a personal service company, it begs what else was found in the reports prepared by Deloitte, and the reasons for off-payroll arrangements – if the BBC’s CFO is to be believed…

The union mentioned that all its members use legitimate tax arrangements – rather than personal service companies to avoid paying it – but I think he’s missing the point!

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