31 October 2014: Consultants providing personal services via limited companies
Many consultants set up limited companies to provide services, in order to reduce their tax exposure.
In Halawi v WDFG 2014 reported this week, the Court of Appeal held that a beauty consultant providing services through limited company was not protected under Equality Act 2010 because she was not in “employment” under s83 of the Act.
This was because Ms Halawi did not have a contract of employment or a “contract personally to do work”. She provided her services through a limited company to a business which supplied staff to a third party (a cosmetics company) to work in an airport duty-free outlet.
Ms Halawi’s argument that she provided services personally and should be regarded as an employee was rejected. There was a power of substitution which was used on occasion. Also, Ms Halawi was not subject to the outlet’s control which meant that she was not generally bound to act on its instructions.
This case will be of encouragement to businesses who want to limit their exposure to employment related claims by taking on staff who use the umbrella of a limited company. However the case might have been decided differently if there had been a right of substitution or if there was more direct control of what she did and how.
Reculver Solicitors is a firm of employment lawyers providing advice on all aspects of employment law including employment contracts, employee and worker status. Call today on 0207 118 0950 or visit our website at www.reculversolicitors.co.uk. We are based in Holborn, Central London, just by Chancery Lane underground.