Matt Salusbury asks if UK EFL teachers can have ‘freelance contracts’
A disturbing trend is proliferating within private-sector EFL – at least in London. EFL teachers working in the capital’s less-prestigious language schools with whom the Gazette is in contact tell us ‘freelance contracts’ are all they’re offered these days.
In many other countries, it’s perfectly legal to be a freelance teacher. In many European countries, for example, it is a high-status position offering genuine tax advantages. In the UK the term ‘freelance’ has no legal meaning and it was completely illegal to hire teachers on a self-employed basis until 2010. Even now, it is rare for Her Majesty’s Revenue and Customs (HMRC), the government’s tax authority, to allow it – if they find out.
One teacher told us they knew such contracts were ‘dodgy’, but felt the prevailing labour market gave them no choice but to accept very disadvantageous freelance status. Sample contracts seen by the Gazette describe the teacher as ‘freelance’ or ‘self-employed’, meaning the schools don’t have to make National Insurance (payroll social security taxes) contributions or give paid holidays, sickness pay or maternity pay. Anxious to get as much tax revenue as possible, HMRC takes a keen interest in whether a worker is an employee – with income tax and National Insurance liable to be deducted at source by the employer. Genuinely self-employed people must fill in annual tax returns and make their own NI contributions (generally less than for employees) themselves.
Under English law, not being given employee status on a contract does not mean you are not an employee. The way to check your position is to use HMRC’s Employment Status Indicator (http://tools.hmrc.gov.uk/esi/screen/ESI/en-GB/summary?user=guest). We loaded the details of one ‘self-employed’ EFL contract and generated an ‘employment status outcome’ – a handy pdf that is valid in a court of law. This told us that ‘the worker is an employee, based on a low degree of control of substitution, control, financial risk, business structure’. In the eyes of the feared UK tax authority, the working conditions offered by the school make it an employer and therefore legally obliged to make income tax and NI deductions at source.
The HMRC guide to determining the status of workers lists a complex set of factors. Is the employer obliged to provide or offer work? Can teachers turn work down? Can they work for a rival school? The guide asked such questions as, ‘Under the terms of their contract, if the worker is unable or unwilling to carry out the work personally, are they obliged to send someone else to do it?’ The ability to send in a substitute is a key feature in establishing self-employment, though one ‘self-employed’ contract we’ve seen forbids it. Other determiners of self-employment include having to provide your own equipment for the job and making good any work that turns out to be sub-standard – hard to do in teaching!
There’s a long list of occupations that, over the years, HMRC or the courts have ruled you can carry out as self-employed, and others that you have to do as an employee. Recent court and tribunal cases such as Hall v Lorimer make it easier for some teachers (more accurately trainers) delivering occasional tailor-made courses to be self-employed. But the Gazette understands this doesn’t cover ordinary general English teachers teaching ‘regular timetabled hours’, the intermediate class between half past nine and twelve every weekday, for example. These teachers have to be employees.
If Tefl teaching is your main or only job, it’s in your interests to be an employee, not a ‘false freelance’. Being an employee means you are eligible for statutory sick pay, unemployment pay if you lose your job, pension, holiday pay and redundancy money. So what can you do?
HMRC will go after your employer for the unpaid tax and NI. In practice, they are less likely to bother shaking down individual teachers. However, be aware that reporting your school to the HMRC for offering illegal contracts could possibly tip an already troubled school into bankruptcy, so it’s your judgement call. Getting your employee status recognised means you’ll be eligible for the government Redundancy Insurance scheme which (theoretically) ensures employees of folded companies at least get their last month’s wages paid.
It’s not just HMRC schools need to fear. The British Council randomly checks employment contracts to ensure these are HMRC compliant. If there is no contract or there are a lot of ‘freelance contracts’ in a school they inspect, they may well raise this issue with the institution and in some cases may put the school’s accreditation under review. You might like to point out to your school that the lack of proper contracts may influence the outcome of their inspection. The British Council, however, will not accept complaints from teachers.
Taking the school to court is almost impossible. Recent cuts to the UK legal aid system make it very expensive. This is where belonging to a trade union suddenly becomes important – the Gazette advises teachers to consider joining one, not as a militant gesture but as an insurance against the costs of an employment tribunal. In the Gazette’s experience, the ATL union, as well as being the least militant, best understands small private-sector employers. There are other unions, including the GMB and the UCU, which take on Teflers – check them out yourself.
Remember, it’s already too late to join a union when your school’s about to go under. Consider joining a union now –they will only provide free legal services to members who’ve already been with them for several months.
If you actually want the flexibility of being a self-employed teacher, teaching for two or three different clients will help your case, as well as registering as self-employed and getting your unique tax reference number. Having more than one string to your employment bow helps too. There is a pool of genuinely freelance specialist EFL teachers, mostly moonlighting writers and actors, on England’s south coast who work in this way. Local schools ring round until they find one of them who’s free to do – say – a short business English course or an Ielts prep boot camp. The nature of the demand for specialist courses makes it easier for schools and genuine freelancers to manage such a job while ‘resting’ between acting roles or writing commissions. But, as many schools have found out, turning a teacher into a freelance is fraught with legal problems.
PIC CAP: TAXING TIMES The tax authority takes a keen interest in whether or not a worker is an employee. Copyright Matt Salusbury