Q: As a Limited Company I have been working for a company who have been my main client for the past eight years. Are they legally obliged to pay me holiday pay? If so how much?
Mar 13 2006
Answered by: Peter Done Ask a question
To determine whether any worker is entitled to statutory benefits such as holiday pay it is necessary to determine their status. So the question becomes, are you an employee or self-employed? It seems that you have answered your own question by stating that you regard this company as a ‘client’ and not an ‘employer’.
However, here is some more background to the subject: if a worker answers yes to the following questions it is likely that he will be classed as an employee.
- Do you use your own tools?
- Do you have to do the work yourself (as opposed to being able to send somebody else to do the work)?
- Would you be disciplined if you didn’t attend work at the expected times?
The answers to these questions go towards establishing the level of control the company has over the worker and whether or not there is mutuality of obligation. The recent case of AD Bly Construction Limited V Cochrane, November 2005 states that if no true mutuality of obligation exists then no employment relationship exists, this case confirms a long line of similar cases. If the company is not obliged to offer you work and you are not obliged to accept that work then the likelihood is there is no mutuality of obligation. If mutuality of obligation exists then an employment relationship may be established and you may be classed as employed by the company and as such will fall under The Working Time Regulations which would entitle you to benefits such as holiday pay, Statutory Sick Pay, etc. However, if you are unable to show that a mutuality of obligation exsits then you would be classed as self-employed and therefore would not be entitled to these statutory employee benefits.
The Inland Revenue website offers a far more detailed analysis of the test: http://www.hmrc.gov.uk/new-cis/cis349.pdf
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