Post 3: Employment Law Exposure – When Self-Employed Workers Start to Look Like Employees

Many firms assume that if a worker is a self-employed sole trader, they cannot claim employment rights. That assumption has cost businesses thousands in tribunal claims.

The legal background

A well-known example is the Pimlico Plumbers Ltd v Smith [2018] UKSC 29 case.
Gary Smith worked for six years under a self-employed contract. He wore the company uniform, used a branded van, and worked fixed hours. When his engagement ended, he claimed unfair dismissal and holiday pay.

The Supreme Court ruled that he was a worker, not genuinely self-employed, because the company controlled how and when he worked.

This case confirmed that contracts alone do not define employment status. The day-to-day reality does.

What that means for your business

If your sole traders are directed, managed, or restricted in how they work, they could later claim for holiday pay, sick pay, or other worker rights. Even one successful claim can set a costly precedent.

The hidden risk

Tribunals assess working practices, not paperwork. If your managers set start times, approve time off or allocate specific jobs, it starts to look like employment.

How to protect yourself

When those same individuals are engaged through NRP’s CIS model, they remain self-employed but under a compliant structure.
NRP handles CIS verification, contracts, and payments, creating a clear separation between your company and the worker.

This protects your business from employment law claims while keeping the flexibility and cost-effectiveness of a truly self-employed workforce.

CASE STUDY – Pimlico Plumbers Scenario

Next up – Post 4: Why Using NRP Costs You Nothing and Provides Protection and Compliance

Contact Steve McDermott if you would you like to know a little more about the risk and benefit of outsourcing you contractor payroll, and have No-obligation chat:

steve.mcdermott@newredplanet.com or 07854 881 220 or 0161 713 1730