Annex 2
We have been consulted by Leven Bridge Construction
Limited for advice in connection with your above named member's
Application to the Employment Tribunal for unpaid wages (holiday
pay) which, we understand, is listed for Hearing on 2 March and
have been passed a copy of the correspondence passing between
you.
We apologise if our clients have not expressed
themselves in correct terms but we feel that the essence, and
certainly the result, of what they say in their letter to your
member of 20 January 2004 is correct.
Although we have not taken detailed instructions
from our client it would appear that you are correct in that your
member is a "worker" coming within the ambit of the
Working Time Regulations and therefore entitled to holiday pay.
However, this was not intended to be the case when he was engaged
to undertake work for our client company.
We are instructed that the arrangement which
was agreed was that your client would provide our clients with
a price per square metre for the work and that our clients would
pay your member for the work carried out in accordance with invoices
to be submitted by him. Pursuant thereto, our clients regarded
your member as being in business for himself in which circumstances
he would not be a "worker" and therefore, because he
was not entitled to holiday pay, our clients agreed to pay him
an enhanced rate.
Further, pursuant to the above agreement, your
member was paid gross for the work carried out less 18 per cent
as required by the CIS Subcontractor Scheme.
As your member now alleges that he was not,
in fact, in business for himself but was, in reality, a "worker"
he would be deemed, under the Inland Revenue Rules, to be an "employee"
for the purposes of tax, even though he may not be deemed to be
an employee for the purposes of the Employment Legislation, in
which circumstances our client company would be obliged to deduct
tax and National Insurance at the full rate. This is what our
clients were attempting to convey in their letter to your member,
of 20 January and in their letter to you of 28 January 2004.
In your letter of 23 January 2004 you suggest
that our client is becoming confused with the terms "worker"
and "employee" but this is not, in fact, the case. The
confusion appears to be arising from your own failure to distinguish
between an "employee" for the purposes of the Employment
Legislation and an "employee" for the purposes of the
Inland Revenue.
In conclusion, our clients are willing to accept
that your member was a "worker" and therefore entitled
to holiday pay but point out that, that being the case, he cannot
carry out that work under the benefit of the CIS 4 and our clients
are obliged to account to the Revenue for the full tax and NIC.
Will you please confirm that this is accepted.
Would you please also confirm that the figures
set out in our client's letter to your member of 20 January 2004,
which figures were prepared by the company Accountants, are also
accepted and that the amount due from your member can be set off
against the amount due in respect of holiday pay.
T R Baker
James & Baker
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