Forced to go self employed on lesser terms than colleagues

Sorry to hear of your situation. Just to clarify, you have explained that upon returning from maternity leave to part-time employment as a hairdresser, you have been told that due to the increased costs of the minimum wage and pension payments, the business does not wish to continue employing you or any other existing employees, but instead is moving to a business model where all stylists are engaged as self-employed contractors. The salon already engages a number of other self-employed hairdressers and, provided all the employees are being moved to self-employed, you have not been singled out. You have also explained that there is a disparity between the terms you have been offered in comparison to the terms of the existing contractors. You will have to pay the salon 40% of the fees paid by clients and provide your own materials whereas the existing self-employed individuals pay 30% of the fees and do not provide their own materials.

Your employer no longer needs employees to perform hairdressing duties and will instead outsource the work to self-employed contractors. This is what is called a ‘business reorganisation’ which can be a fair reason for dismissal. As a result of this re-organisation it means this is a potential redundancy situation because, although the actual work has not reduced, the requirement to have employees doing it in a particular way has. You are entitled to be consulted with about the proposed redundancy, although it would seem that the decision has already been made and so consultation would be of little use and may make this an unfair dismissal. If you were not consulted because you were on maternity leave then this would also be discrimination.

If your employment is brought to an end for this reason then you are entitled to receive a redundancy payment based on your length of service, age and current part-time salary (capped at £479 per week). The offer of self-employment is not suitable alternative employment and does not therefore mean you forfeit the right to a redundancy payment by accepting it. If your employer does neither of these things, you could bring a claim against them for unfair dismissal and the unpaid redundancy payment. However, for unfair dismissal you will be obliged to ‘mitigate your loss’ which means trying to find another job and anything you do earn would be offset against any compensation, so it is not an attractive route for you.

Your employer cannot force you to accept the offer of self-employment, but they can bring your current employment to an end. They have to show that they consulted with you before a final decision was made and that dismissal was for a fair reason i.e. redundancy.

You have explained that all existing employees are being asked to go to self-employed status so there are no grounds on which to suggest that by asking you to change status you have been treated less favourably because of your pregnancy/maternity leave and/or part-time status. However, you are being offered a position on different terms to existing contractors, with a 40% contribution to the salon and having to pay for your own materials. If you know of new contractors being taken on now who contribute less than 40% and have their materials thrown in, then you may have a claim for discrimination under the Equality Act.

If your employer can show that all current employees who become self employed and all future contractors have or will be offered the same terms as offered to you then there is little you can do about this, but if he cannot then you may have a claim under the Equality Act.

The Equality Act applies not only to ‘normal’ employees but to those who contract personally for services. It is an offence to discriminate against you in relation to the terms offered and you will say that it is because you have exercised your right to take maternity leave and on grounds of your sex.

Also, there is legislation which protects part-time workers (as opposed to employees) from being treated less favourably than others doing the same role, but on a full-time basis. Therefore if your full-time self-employed colleagues are paying less to the salon than you, you would have a claim.

Whether you accept the offer of self-employment is ultimately a decision for you, bearing in mind the fees you are likely to receive and your tax and insurance obligations that come with being self employed. Bear in mind that as a self-employed contractor you have the freedom to work elsewhere too. However, also be aware that the Revenue may look closely at this arrangement to see if you really continue to be an employee rather than a contractor and they will look at your ability to work elsewhere and to substitute people in your place.

I suggest you speak to your employer again, remind them of their obligations regarding redundancy and try to negotiate the fee percentage down to 30%, perhaps by reminding them that you have a loyal client base and are committed to developing that.

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