Contractors' Questions: Am I entitled to holiday or sick leave?

Contractor’s Question: My contract seems fairly typical for an IT freelancer, as it says that it is not an 'employment contract' but a 'provision of service', and that my relationship to the end-user is that of 'independent contractor'.

But the job is on a rolling contract and, currently, is my only source of income although there is no guaranteed work and the hours average out to only 18 per week, with some weeks and months having no work available at all. I would like to know if I am entitled to any sort of leave on this type of contract - there is no mention of any kind of holiday or sick leave in the contract.

Expert’s Answer: I assume from the information provided in your question that you are not working through your own company, but that you regard yourself as self-employed, for employment law purposes. 

Whether or not you are self-employed is not something you and the engager can decide between you; your actual terms of engagement need to be consistent with the relationship not being employment. In your situation, based on the details given, it seems likely that you are indeed self-employed for employment law purposes. 

Sick pay seems to be something that only employees are entitled to, in the absence of express agreement. So I do not think you are entitled to sick pay; but I think it unlikely that you would be considered to be in breach of contract if you were unable to work as a result of sickness; to that extent, I think you would be entitled not to work when sick.

Holiday pay is (considerably) more complicated. Paid leave is governed by the Working Time Regulations, which apply both to employees and to workers. 

A worker is an individual contracted to provide services personally, other than in circumstances where the individual is genuinely in business on his/her own account, and the engager is not a client or customer of a business carried on by the engager.

It sounds to me from the facts you have given that you may well be a worker. On this basis, it seems you should be entitled to paid leave of 5.6 weeks per year. 

As a worker with no ‘normal working hours’, the rate of holiday pay to which you are entitled for each period of paid leave is calculated by looking at each of the most recent 12 weeks in which you did some work. 

So, if for example in week-2 you did no work, you would disregard that week but also include week-13, assuming you did some work in all of weeks -1, and -3 to -13 inclusive.  

The next step is to calculate the average amount of a ‘weeks pay’, by dividing the total gross pay for all those weeks by 12.  This then tells you the amount to which you are entitled for each week you take of your leave entitlement. 

You will note it follows that paid leave taken immediately after 12 busy working weeks will be paid at a higher rate than if taken immediately after 12 relatively slack working weeks. 

A few other points for you to consider:

  • You cannot – and the engager cannot require you to – ‘contract out’ of your paid leave entitlement; if you are a ‘worker’, then you qualify for paid leave, period. 
  •  Save on termination of the engagement, you cannot demand payment in lieu – you have to actually take the period of leave, in order to be entitled to holiday pay.
  •  You may only take paid leave in the leave year in which it falls due – you cannot require untaken leave to be carried forwards.
  •  If the engager refuses to give you paid leave, you can complain to the Employment Tribunal
  •  Any action on the part of the engager which penalises you for trying to enforce your rights to paid leave may amount to a ‘detriment’, and may of itself give you grounds for further complaint to the Employment Tribunal.

The expert was Roger Sinclair, legal consultant at egos, a contract law specialist.

Thursday 24th Sep 2015
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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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