Tax

Tax

This topic considers various aspects of tax law that are often encountered by employment lawyers.

For employment law purposes, an individual who provides work or services for another person may fall within three categories; they may be a worker, an employee (in which case they will also be a worker), or they may be a self-employed or independent contractor. However, from a tax perspective, an individual is either employed or self-employed; there is no third category. While some of the same caselaw is relevant to the question of employee status in the context of tax and employment law , there is now a divergence in the approach taken by the tribunals and courts in dealing with employee status for these purposes. This may mean that, even if an individual is not regarded as an employee for tax purposes, an employment tribunal may determine that they are an employee and therefore eligible to bring a claim eg for unfair dismissal or redundancy, and vice versa. For more detailed information on employee status in the context of employment law, see Practice Note: Employee status.

Employment status for tax

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Latest Employment News

Employment weekly highlights—30 January 2025

This edition of Employment weekly highlights includes: (1) the updated Employment Rights Bill, (2) an employment tribunal decision finding that Addison Lee drivers were workers and holding that the two-year backstop on unlawful deduction claims is unlawful, (3) the Court of Appeal’s declaration that section 4(2)(a) of the State Immunity Act 1978 is incompatible with Article 6 of the European Convention on Human Rights, (4) regulations increasing the annual data protection fees payable to the Information Commissioner, (5) analysis by Katie Farmer of Trowers & Hamlins of an EAT decision that a claim for unpaid holiday pay vests in the claimant’s trustee in bankruptcy, and awarding ‘interest-like’ compensation for the payment delay, (6) the Courts and Tribunals Judiciary guidance on communicating with employment tribunals, (7) new Employment Tribunal Presidential Guidance on taking oral evidence from persons located abroad, (8) the IRLR Highlights for February 2025, (9) dates for your diary, and (10) other news items of interest to employment practitioners.

Parliament publishes updated Employment Rights Bill

Parliament has published the most recent version of the Employment Rights Bill, incorporating the amendments made to the Bill during the committee stage. Notable changes to the Bill include the addition of Statutory Sick Pay measures for Northern Ireland, the inclusion of a chapter in relation to seafarers, the increase in the time limit for bringing employment tribunal claims and an amendment to the circumstances around an employer’s duty to make a guaranteed hours offer and the requirements for withdrawing such offers. The Bill is now set for the report stage of its progress through Parliament.

Employment Tribunal finds that Addison Lee drivers were workers and holds that two-year backstop on unlawful deductions claims is unlawful (Afshar and others v Addison Lee Ltd)

Employment analysis: In Afshar and others v Addison Lee Ltd 7 January 2025 an Employment Tribunal held that drivers engaged by Addison Lee Limited (‘AL’) in its private hire business are workers within the meaning of the Working Time Regulations 1998 (‘WTR’) and the National Minimum Wage Act 1998 (‘NMWA’) and therefore entitled to receive paid annual leave under the WTR and the national minimum wage. In addition, in what is thought to be the first judicial decision on this question, the Tribunal held that the two-year backstop on unlawful deduction claims created by section 23(4A) of the Employment Rights Act 1996 (ERA 1996) is unlawful, having been introduced by regulations which were ultra vires section 2(2) of the European Communities Act 1972 (ECA 1972). Written by Oliver Segal KC and Melanie Tether of Old Square Chambers.

TPO rules in favour of pension scheme member promised 'mirror benefits' by employer

The Pensions Ombudsman (TPO) has ruled in favour of a pension scheme member (Mr H) who was promised mirrored benefits, including pension increases, upon transferring to the Olivetti UK Limited Pension and Life Assurance Scheme 18 years ago. The determination found the employer in breach of law for failing to properly document the promised benefits, and the Trustee in breach of trust for not administering the scheme according to its rules. Notably, TPO established that a continuing contractual obligation existed despite the lack of formal documentation, and that the employer could not rely on a limitation defence. As an outcome of these findings, TPO has directed: