Freelancers and Holiday Pay

In a claim which directly challenged public sector hiring practices, Susan Winchester argued that she was an agency worker under the Agency Worker Regulations 2010. Experts have warned that the case could be the ‘tip of the iceberg’ for freelancers bringing claims for workers’ rights.

Freelancers and Holiday Pay

Susan Winchester is a marketing and business development consultant who provided marketing services to HMRC. She brought a claim for unpaid holiday pay against HMRC and four other parties earlier this year under the Agency Workers Regulations 2010. She argued it was unfair to treat her as a worker for tax purposes but not provide her with workers’ rights in return.

Under the IR35 rules, which were introduced in April 2000, freelancers who work through a personal services company for a third party are required to pay tax and national insurance as if they were employees. Initially, contractors decided whether they fell within IR35. However, in April 2017, the law changed to require public sector organisations to determine the tax status of their freelancers instead.

HMRC determined that IR35 applied to Ms Winchester’s company, SJW Marketing Solutions Ltd, when they were engaged to provide their services, using the online Check Employment Status for Tax (CEST) tool. Ms Winchester was put onto an agency payroll, a decision that could not be challenged. She claimed that as she was then effectively an agency worker, she was therefore entitled to holiday pay and to the same holiday entitlement as employees of HMRC.

On the morning the tribunal was due to start, a settlement was agreed totalling £4,200.


As the case settled it is difficult to predict what the outcome might have been; however, it is another case in an ever–growing body of case law featuring freelancers/self-employed contractors seeking to claim additional entitlements including holiday pay.

We reported on the case of King v The Sash Window Workshop Ltd in November 2017. The Court of Justice of the European Union decided in that case that Mr King could claim for holidays covering his entire period of engagement (13 years) as a worker, having wrongly been classified as a self-employed contractor by the company.

There is now an ever-increasing risk for businesses who engage self-employed contractors where the relationship could more accurately be classed as employer/employee or employer/worker. Businesses should be undertaking an audit of their self-employed contractors to determine their true employment status and, where possible, be doing all they can to ensure that the relationship has none of the hallmarks of an employment relationship.

If you have any queries in relation to holiday pay or any other HR queries please contact Joanne Holborn, Tom Scaife or Caroline Rayner on 01228 552600 or 01534 548494.

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