Employer wants to make us all self-employed

Sorry this is so long but I am desperate for clear cut advice.I work for a small business, currently with 5 employees.I have recently been told by my employer that as a"cost cutting" exercise she will be making all staff self- employed.I had immediate concerns with this, not just the fact of losing all the benefits that an employed position provides(eg guaranteed set wages, paid holidays etc)but also could she legally do this?As far as I am aware it is not her decision to simply switch us from employed to self employed status but that is something for the Inland Revenue to decide and from issues discussed with her since on how this would actually work, I am of the opinion that we would probably be deemed not to be self employed anyhow.However ,she is determined to go ahead with this course and after phone calls to acas I have been advised that as our contracts of employment would have to be terminated before this change takes place, those with 2 +years service would be entitled to redundancy.The concerns I have are that although technically we would be made redundant one week ,she would have us all working straight back for her the next week,albeit on a self-employed basis and what position would that put us in with the Inland Revenue?None of us want to be self-employed but feel we are being pushed into a situation. Oh, and she is currently refusing to pay the redundancy anyhow! Help!!

Welcome to the forum. I am sorry to hear about what is happening to you at work. I hope I can help you, but it does sound as those things are rather messy. This is something that I have rarely seen in business.

As you rightly pointed out, if your employer asks you to sign a new contract which says that you are self-employed, signing the contract doesn't automatically mean that you then become self-employed. This is due to the fact that, regardless of what your employer says, whether or not you are an employee or self-employed depends on what happens in practice and the relationship between you and your employer.

In order to determine the nature of a contract, it is necessary to apply common law principles. If you can answer yes to the following questions, you are likely to be found to be an employee as oppose to self employed. I'm not sure how much your job and working arrangements would change but if it's minimal or not at all, you should be able to answer these.

* Do you have to do the work yourself?
* Can someone tell you at any time what to do, where to carry out the work or when and how to do it?
* Can you work a set amount of hours?
* Can someone move you from task to task?
* Are you paid by the hour, week, or month?
* Can you get overtime pay or bonus payment?

OR

If you can answer 'Yes' to all of the following questions, it will usually mean you are self-employed.

* Can you hire someone to do the work for you or engage helpers at your own expense?
* Do you risk your own money?
* Do you provide the main items of equipment you need to do your job, not just the small tools many employees provide for themselves?
* Do you agree to do a job for a fixed price regardless of how long the job may take?
* Can you decide what work to do, how and when to do the work and where to provide the services?
* Do you regularly work for a number of different people?
* Do you have to correct unsatisfactory work in your own time and at your own expense?

If your employer decides that your status is self employed and treats you as self employed rather than deducting tax and national insurance, they could be at risk of incurring a major financial liability for tax and national insurance deductions if your employment status is subsequently changed following an Inland Revenue enquiry.

Acas is correct, if you contract ends, you should receive the redundancy payment. If your employer refuses to pay redundancy, you can take the matter to an employment tribunal. You can do this at any time but you must do it within six months of the day your job ends.

I hope this has helped. Please let me know how this develops for you. I wish you all the best.