SMP trap for agency workers
Emma Rawson explains why agency workers could fail to qualify for statutory maternity pay (SMP) if there is a delay in being allocated their first assignment.
Mrs Olga Swieca (TC07449) signed a contract with an agency on 13 January 2017, but did not undertake her first assignment until 3 May 2017. When she fell pregnant later that year, the agency refused her request for SMP, a decision which was upheld by HMRC.
SMP and continuous employment
Eligibility for SMP is governed by s164 SSCBA 1992. The key issue before the FTT was whether Swieca met the condition in s164(2)(a), which required her to have been “in employed earner’s employment with an employer for a continuous period of at least 26 weeks ending with the week immediately preceding the 14th week before the expected week of confinement…”
Applying this somewhat convoluted wording to the facts of the case, in order for Swieca to qualify for SMP she had to have been in continuous employment during the period from 11 February 2017 to 20 August 2017.
When did employment start?
HMRC and the agency argued that this condition couldn’t be met as Swieca hadn’t actually started employment until she took on an assignment on 3 May 2017.
The FTT agreed: there were no payslips evidencing paid employment or evidence any work was done until that date. Her contract with the agency also pointed towards employment only starting when an assignment was accepted on 3 May, especially as it was stated to be a contract “for services” (and not “of service”) and stressed that no contract existed between assignments.
The FTT also observed that, although Swieca had indicated via her P46 in January that the agency was to be her sole employment, this only demonstrated her state of mind and not that employment had started by operation of law, contract or circumstance.
Breaking something that hasn’t started
Swieca argued she was in continuous employment throughout the required period, despite not having carried out any work until 3 May 2017. In support of this she pointed to various pieces of HMRC guidance (eg SPM250800) which effectively say that, for agency workers, a period of continual employment is not necessarily broken just because the agency didn’t offer you any work in any particular week.
The FTT however noted that this guidance could only save her if she had been employed in the first place. Whilst it may well be that employment is unbroken if an agency is unable to offer work, there needs to have been employment in the first place in order for it to be broken.
In Swieca’s case, no employment started until 3 May. The period before starting work couldn’t rationally be described as a ‘break’ or ‘gap’ in employment.
The FTT were therefore forced to conclude Swieca did not qualify for SMP, noting that they were bound by the terms of her contract and the ‘unfortunate’ fact that she did not start work until after the 26-week clock started ticking.
Sympathy for the worker
The FTT noted with some sympathy that “it will come as a sore blow” for Swieca to be denied SMP “owing to matters beyond her control”.
Some may also sympathise with Swieca’s argument that the contract she had signed was a sham – in her view it had been drafted to avoid payments to workers, most of the agency’s workers had insufficient grasp of English or employment law to understand it and they stood little to no chance of being able to negotiate different terms. This issue wasn’t considered by the FTT, who noted that it is being investigated through a separate employment tribunal case Swieca is pursuing.
Caution for coronavirus pandemic
This case provides a cautionary tale, highlighting that attention needs to be paid to exact dates and arrangements when considering SMP, especially when it comes to agency work. This issue is likely to take on more importance where coronavirus has resulted in less work for agency staff this year.
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Emma a technical officer with the Association of Tax Technicians (ATT). Her background is in corporation tax and she also has a focus on VAT.
She trained with Deloitte, working in both their London and Leeds offices, and also spent a short time working in a specialist consultancy firm providing advice to other practitioners before joining...