17 January 2025
In a recent Employment Tribunal release, a judge has ruled that Michelle Appiah should receive £36,798.40 in unlawful deductions of employers' National Insurance (NI) and £28.25 in Apprenticeship Levy.
Ruling Awards Michelle Appiah £37K
The Michelle Appiah case saw the worker operate through a Personal Service Company (PSC) via a recruitment agency, Tripod Partners Ltd, for the engager, The Home Office. The online CEST tool was used to determine status and the worker agreed with the determination, being within IR35 rules.
Ruling Focussed on Employers' NI
The key area discussed is whether employers' NI is allowable to be deducted from the assignment rate by the intermediary. It is common practice for assignment rates to be reduced by employment taxes, inclusive of employers NI and Apprenticeship Levy, with the view being that the assignment rate does not represent the actual employment income due to the worker.
The judge in this case reviewed the contract, citing only that it states “employment taxes” which can be taken to mean tax and employees NI, not employers' NI. In the absence of specific wording on employers’ NI, as well as no consent to such deductions from the worker, it has been decided that the reduction from the contractual assignment rate constitutes unlawful deduction from wages.
Employment Tribunal Verdict Likely to be Appealed
As this verdict has been decided by an Employment Tribunal, it is not a legal precedent right now and this case is likely to be appealed, however, it highlights the importance of proper wording and understanding within employment contracts and key information documents required to be compliant in a labour supply chain.
A Complex Case of Off-Payroll Working
As with all off payroll working cases, we attempt to distil down the key information from a complicated and lengthy judgement. If this impacts the work you do, we encourage you to read the judgement in full and consult with legal professionals to understand the impacts on your business.
Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information.