Warning over Holiday Pay Claims

Specialist accountants for contractors, Danbro, are advising businesses that engage self-employed sub contractors to ensure they cannot be classified as workers.

Following the HMRC V Stringer case last month, the House of Lords ruled that workers can in fact accrue paid holiday for their entire sick leave and are entitled to take it on their return or be paid in lieu if their employment ends. As a result, the existing UK Working Time Regulations, which required employees to use all holiday leave within the current year or else it was lost, is no longer in effect. This potentially leaves businesses exposed to back-dated claims for several thousands of pounds – particularly since the annual holiday entitlement has risen to 28 days.

Genuine contractors and freelancers are not entitled to holiday pay, but anyone who has not been operating through an umbrella or limited company service could still be classed as a ëworkerí, which would mean they are entitled to holiday pay, and other benefits.

Danbroís Gerry Gregoire said: ìNow more than ever, any company employing self-employed contractors needs to ensure that they cannot be classified as workers. The best way to do this is to refer these self-employed contractors to a specialist firm such as Danbro, who have the experience and knowledge to eliminate the risk of the company potentially having to pay larger amounts of holiday pay claims.î

In these times of uncertainty where businesses are trying to focus their efforts on surviving one of the most deep rooted recessions on record, they will find that by effectively managing their payroll, they can remove the risk of their self-employed contractors being deemed as workers. This effectively would prevent them, from being able to take further accrued annual leave after long periods of sickness among other employee benefits.