An employment tribunal awarded a freelance social worker nearly PS37,000 ($36,826.65) after it was determined that a recruitment agency had unlawfully deducted money from her salary.
Michelle Appiah’s case highlights the ongoing problems with employment status, compliance and raising questions regarding current legislation.
Michelle Appiah was an independent social worker who had worked for the Home Office in terms that classified her outside of IR35 and as self-employed. When she accepted a role at the Home Office, arranged through recruitment agency Tripod Partners in June 2021 her contract was classified inside IR35. This classification meant that she was treated like an employee of her client.
Appiah chose to continue her work via her limited company, under the IR35 framework. This required Tripod Partners to deduct employment tax before she was paid. The deductions included income taxes, employee National Insurance contributions (NI) and employer National Insurance contributions. The tribunal ruled it was illegal to deduct employer NI from her pay, because employees covered by IR35 regulations are not supposed to be responsible for employer NI.
Demand for simplification of employment status
The decision of the tribunal has reignited calls to simplify and clarify employment laws.
Seb Maley commented that this is a reminder of the complexity of employment status, which has been exacerbated since the introduction of off-payroll regulations. No one is asking if this worker was in IR35, and should therefore have been subjected to PAYE. The tax was illegally deducted, leaving the worker worse off, and the recruitment agency with an expensive bill.
This case may also be the tip of the Iceberg. This case brings compliance to the forefront for employers who engage and place flexible workers. Not to mention, the need for Labour’s recent promise to simplify employment status.
Rebecca Seeley Harris of ReLegal Consulting added: “Finally justice for a contract worker working within IR35 who is taxed like an employee, but does not receive any of rights or protections that come with employment. This ruling could set the stage for more similar ones, as this practice is widespread in the industry. This would be a disaster for the labour supply chain at a time the government wants to boost growth.
