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Was the Karate Kid an employee?

Posted on November 03, 2016

Girl with black belt in Karate pose

The Uber case is starting its journey through the court system; but other employment status cases are available.

It is not always evident whether or not an individual is an employee or not, and there is no simple test for employment status.  Rather, a range of factors should be taken into account in order to ascertain the individual’s status. 

In Ashton v Revenue & Customs Commissioners [2016] UKFTT 0727(TC), the court investigated an appeal against HMRC’s decision to treat an individual as a self-employed partner of Karate World, a martial arts instruction business, rather than as an employee.

The individual had been an employee of the company but following a change in the way the business operated in 2003 was told he would be self-employed and a partner in the business instead.

The court considered a number of elements in the individual’s working arrangements before concluding that he was an employee.  These included the following points:

  • There the Uber case is starting its journey through the court system; but other employment status cases are available.

 It is not always evident whether or not an individual is an employee or not, and there is no simple test for employment status.  Rather, a range of factors should be taken into account in order to ascertain the individual’s status. 

In Ashton v Revenue & Customs Commissioners [2016] UKFTT 0727(TC), the court investigated an appeal against HMRC’s decision to treat an individual as a self-employed partner of Karate World, a martial arts instruction business, rather than as an employee.

The individual had been an employee of the company but following a change in the way the business operated in 2003 was told he would be self-employed and a partner in the business instead.

The court considered a number of elements in the individual’s working arrangements before concluding that he was an employee.  These included the following points:

  • There was significant control over the individual as to when and how he should work- he was not free to operate classes on his own terms – suggesting employment status
  • Some equipment was provided for the martial arts classes, but not all – for example, the individual had to provide his own uniform.  This factor was not indicative particularly of either employment or self employment
  • The individual was given holiday and sick pay – suggesting employment status
  • A partnership agreement had been given to the individual but he had not signed it and indeed the document was incomplete in many respects
  • There was no significant change in the individual’s working arrangement between the time when he was an employee, and the period after 2003, when he was told he was self employed

The Uber case has highlighted the particular question of the “gig” economy and how it interacts with employment status, but the thorny question of employment status goes far beyond that sector. 

Businesses would be well advised to take specialist advice if there is any doubt as to the employment status of their staff. was significant control over the individual as to when and how he should work- he was not free to operate classes on his own terms – suggesting employment status

  • Some equipment was provided for the martial arts classes, but not all – for example, the individual had to provide his own uniform.  This factor was not indicative particularly of either employment or self employment
  • The individual was given holiday and sick pay – suggesting employment status
  • A partnership agreement had been given to the individual but he had not signed it and indeed the document was incomplete in many respects
  • There was no significant change in the individual’s working arrangement between the time when he was an employee, and the period after 2003, when he was told he was self employed

The Uber case has highlighted the particular question of the “gig” economy and how it interacts with employment status, but the thorny question of employment status goes far beyond that sector. 

Businesses would be well advised to take specialist advice if there is any doubt as to the employment status of their staff.  

 
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