employment status: development

[bogbeagle]

The Inland Revenue has been investigating the employment status of the flying Instructors at my club and has today sent me a letter stating its conclusions.

Instructors at my club are compelled to be self-employed. Of course, they exercise none of the freedoms of those who are truly self-employed and instead are treated as employees....but employees who enjoy none of the benefits associated with that status. Many of you will recognise the scenario.

Anyway, the Revenue has decided that we are, in fact, employees and should be treated as such. This decision may have implications for many clubs nation-wide. It may affect YOU.

I haven't been in to work today, so I don't know whether the boss intends to contest the decision. I do know that relatively few decisions are contested.

Quite what the ramifications will be, I don't yet know, but my mind is racing.

[FlyingForFun]

This is nothing new. That's been the situation for many years.

What to do about it is very different. If your employer decides not to offer your the benefits of an employee - holiday pay, for example - are you really going to kick up a fuss? It's a very small industry.....

I am generally anti-unions, and have been since I've been old enough to make up my mind. But this is one area where a union like BALPA is probably the only way of making progress. Unfortunately, I don't think many instructors are members of BALPA (I know I'm not), and I think unions are more likely to be succesful in changing practices at one large employer, rather than at many small employers as is the case with flying schools.

From my own point of view, though, I knew the score before I made the decision to get into the industry. My current employer has never offered me the benefits which an employee is entitled to, but because I never expected them everyone is happy.

FFF
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[bogbeagle]

As I understand things, we instructors are not at liberty to enter into cosy arrangements with clubs re employment status. I mean that, even if both parties are happy with self-employment, it is not legal unless the appropriate conditions are met. At my club, they are not. It may be different where you work.

HM Revenue and Customs decided to look at the conditions where I work. They may decide to look at you. If they do, they may well say that you cannot, for instance, claim tax relief on this, that and the other. They will not care that your disposable income is now slashed...you will be taxed as an employee. So, you will then need to negotiate a fair deal for yourself...difficult.

The situation where I work is that, although we instructors talk of Union involvement, we dare not do so openly. Without employment rights, we would be history. I'm hoping that this latest decision by HMRC will change that.

As for me, I am very much in favour of being represented by a Union. I approached BALPA about a year ago, in writing. They were not courteous enough to reply. Perhaps other instructors have had more luck.

The ideas of having sickness benefits, paid leave, employment protection etc, seem marvellous to me. And just as importantly will be the right to negotiate fair pay without the threat of imminent dismissal.

I cannot understand, FFF, why you should take an anti-Union stance. Do you enjoy the complete imbalance of power that, I assume, exists between you and your "employer"?

I do hope that you will be principled enough, if the going gets tough, to stick by your beliefs and not "piggy -back" from the efforts of others.

As to Unions, many of you will know that, at Shoreham, a Professional Instructors' Association has been formed. Its leading light would seem to be Dorothy Pooley. A meeting was held at Cranwell a few weeks' ago and was well attended. I understand that another is being planned for the near future somewhere in the Manchester area. I will keep you informed.

[Flying Farmer]

I quote FFF

From my own point of view, though, I knew the score before I made the decision to get into the industry. My current employer has never offered me the benefits which an employee is entitled to, but because I never expected them everyone is happy.


FFF could you explain what benefits you are not been offered? employees are entitled to certain benefits under UK employment legislation I hope you are not suggesting your current employer is operating outside the legislation set down in law.

[FlyingForFun]

FF,

I have never asked for, nor been offered, holiday pay. I have not had to take a single sick day during my current employment, but if I did, I would not ask for, nor expect, sick pay.

I do not have a written contract with my employer which specifies notice periods. As such, when colleagues of mine have handed in their notice with less than a week before they start their new airline job, my employer has had to accept that - just as they have to accept that I have taken far more time off than many employers would allow. It works both ways.

I am fully aware that this is not entirely legal, and I am sure that if I reported it, the authorities would find as they have with bogbeagle. Since I am not contracted to work any set number of days, it wouldn't surprise me if the number of days I was scheduled to work reduced if I started making noises - but since I'm happy with the current situation, I have no intention of making noises in any case. Besides which, it's all a little academic since I'm leaving in a week.

Bogbeagle, I don't believe there is an imbalance of power to the extent that you think there is. As I already said, the lack of formal procedures works both ways. As for general Ts+Cs, with the employment market picking up the way it is, my employer has recently offered jobs to a couple of new instructors, and been turned down because the money was too low. I don't believe they are having trouble finding instructors yet, but if the employment situation continues on its current trend, it won't be very long before the balance turns the other way, and the schools need the instructors almost as much as the instructors need the schools.

On a more general note (but a good indication of how unions' need to get involved does not work), many years ago, I took a summer job in the school holidays at an unemployment office. One of the girls who was also there for the summer was related to a permanent member of staff (her niece, if I remember correctly) and used to help her aunt out on the front desk from time to time. Everyone was happy with this arrangement, until the union rep discovered that this girl was not of a sufficiently high grade to be working on the front desk. Despite everyone telling him to drop it, he insisted on pushing management to promote her to the appropriate grade for the work she was doing. Of course management were having none of it, and promptly told her she was not allowed to work with her aunt on the front desk any more. She was confined to the back office, and left shortly afterwards because she didn't like the way she'd been pushed out of the job by the union rep's involvement.

FFF
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[homeguard]

You may wish to read the decision made by the UK Special Commissioner for Income Tax Decisions; Mal Scaffolding v Inland Revenue & Customs, 26th March 2006. It is quite a long judgement but would suggest that the flying club mentioned above will be successful in any appeal against their local tax office decision to treat flying instructors as employees. The case has many simularities to how we work as Flying Instructors.
http://www.bailii.org/cgi-bin/markup.cgi?doc=/uk/cases/UKSC/2006/SPC00527.html&query=MAL+scaffolding&method=all
Whirlybird your comments please.

[aviate2day]

An accountant put it like this to me.
Imagine being paid to build a wall.
If you get paid for a days work, whether the wall is finished or not you are employed.
If you only get paid for the finished wall then you are self employed.
When I was instructing we were only paid for the hours we flew, no retainer or daily rate. Therefore self employed.
I worked out that after all the travel etc I only cleared £5,000 over the 12 months I was instructing for.:ugh:

[BigEndBob]

Therefore if you are paid a daily rate plus hours..you should be employed.
If you only get paid hourly..then self employed.

Does that sound reasonable?.

[homeguard]

No.
Read the judgement by the Special Commisioners that i gave earlier using the link. It is the first judgement that defines self employed vs employed. The judgement requires careful reading but is definative in its scope.

[Lord Flashart]

No.
Read the judgement by the Special Commisioners that i gave earlier using the link. It is the first judgement that defines self employed vs employed. The judgement requires careful reading but is definative in its scope.

Homeguard,

This whole discussion is rather relevant to me, as I'm about to start my training and intend to reclaim the VAT as I anticipate working as an instructor on completion.

In the case of point (i):
(i) - the servant agrees that in consideration of a wage or other remuneration he will provide his own work and skill in the performance of some service for his master.

I think this is not satisfied, in that there is no "wage" as long as a retainer is not paid - is this your opinion?

for (ii) - He agrees, expressly or impliedly, that in the performance of that service he will be subject to the others control in a sufficient degree to make that other master

I think this is not satisfied either, since an instructor is under no obligation to give notice for example if he chooses to accept no more work, and is also in control of when and how the lessons are provided - that is, the instructor is finally responsible for covering the required material, and is responsible for deciding whether to fly or not on a particular occasion for reasons such as weather, aircraft maintenance etc.

and for (iii) I am of the opinion this is bluster. If "the other provisions of the contract are consistent with it being a contract of service" is a test, how do we know what "other provisions" are considered consistent with the existence of a contact of service - it is this on which I'm most interested in your opinion.

Will be interesting to see how this turns out.

[homeguard]

A major change decided by the Special Commisioners was that you can be what you say that you are. The Revenue had always disputed this saying that you are what their rules saids that you are. In my opinion the Commioners have clarified that two parties may agree a work status, self employed or employed. Of course that also needs to be true in how you do it. It is important how the two parties verbally or in writing make the agreement.
A major element of the Commisioners decision is that the Contractor (the Flying School) may provide the facilities, equipment the aeroplane and also find the work - take the bookings and also the money but contract you to do the work for an agreed fee per hour flown. In the case of Mal Scaffolding the Inland Revenue disputed this point and lost. However I believe that there will be a difference between being paid for your time in attendance and solely being paid for the hours flown. Most Instructors are of course paid by the hour flown and receive nothing if not. Should an Instructor be paid a basic wage, set hours (even if varied) and flying pay as a commision on top I suspect that they will still be treated as employees. A daily guaranteed sum against flying time may be treated differently. A requirement that you make yourself available between certain times to undertake work as it may arise could be asked of any sub-contractor. It would be reasonable to make a charge for this standby service given to the school. Such a scenario wasn't tested however in the case of Mal Scafolding Ltd.