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Self-Employment and the National Living Wage

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Last week our blog post covered how some firms were tackling the new National Living Wage. This week were exploring the other end of the spectrum, and how the wage applies to self-employed workers.

 

Self-Employment – A Brief Background

The 21st Century has seen a substantial boost in the number of self-employed workers in the UK, with most people doing so for positive reasons. At the turn of the Millennium, around 3.2 million people were classified as self-employed. Between 2001 and 2015, part time self-employment grew by 88% with full time work growing by 25%.

Self-employed workers now make up around 15% of the UK workforce, with more than 4 million people now being classified as self-employed. Statistics show that 28% of workers belong to the financial and business sector, followed by health and social work at 9%. Studies also shows that most workers have become self-employed for positive reasons.

 

How does this apply to the National Living Wage?

Following Theresa May’s first speech as Prime Minister, people are urging for her to launch an investigation into the low pay of self-employed couriers, as it was revealed that couriers contracted to Hermes were struggling to earn the national living wage.

Currently HMRC has a list of criteria to determine if a workers falls under the category of self-employed. These questions include:

  • Whether the business provides the materials, tools and equipment for their work
  • Whether they only for the business
  • If a manager of supervisor is responsible for their workload

Because of this criteria, it has been argued that the courier drivers who are self-employed are not covered by the national living wage and thus the arrangement is legal. However parties are arguing for HMRC to review whether or not this criteria is adequate.

 

Questions?

If you have any questions about whether or not you are self-employed, feel free to get in touch with our parent company, Finnies Accountants. Alternatively if you have any questions about the national living wage, please call us on 0845 308 2288.

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Key Contact: Lynne Auton
Tel: (0845) 308 2288
Email: payroll@payrollsolutions.org.uk
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