Self-employed subcontractors lose unpaid wages claim: worker status denied
Two construction workers who were not paid for short-term work on a day rate have had their claim for unauthorised deductions dismissed after the tribunal found they were independent contractors, not workers.
1 min read · Last updated 18 May 2026
Case details
- #self-employed
- #cis-scheme
- #day-rate
- #price-work
- #worker-status
Key facts
- Mr Bailey worked 4.5 days and Mr Bainsal worked 5 days in March 2022.
- Both claimants were paid a day rate of £200, subject to 20% CIS tax deduction.
- The respondent did not pay the claimants, citing poor workmanship.
- Both claimants were registered under the Construction Industry Scheme (CIS).
- The tribunal found the claimants were independent contractors, not workers.
Timeline
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Mr Bailey starts work
Mr Bailey began 4.5 days of work for Capital Contractors Ltd.
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Mr Bainsal starts work
Mr Bainsal began 5 days of work for Capital Contractors Ltd.
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Both claimants finish work
Both claimants completed their work for Capital Contractors Ltd.
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Case management hearing
Employment Judge Bromige held a case management hearing to discuss issues.
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Final hearing and judgment
Employment Judge Keogh heard evidence and dismissed both claims.
The legal issue
The tribunal had to decide whether two self-employed subcontractors were 'workers' entitled to protection against unauthorised deductions from wages, or independent contractors operating their own business.
The outcome
The tribunal dismissed both claims for unauthorised deductions from wages.
The key reason was that the claimants were independent contractors, not workers under section 230 of the Employment Rights Act 1996. They were registered under the Construction Industry Scheme (CIS), paid a day rate, and had the option to move to price work, indicating they were in business on their own account.
No compensation was awarded as the claims failed on the preliminary issue of status.
Lessons & takeaways
- If you are self-employed and registered under CIS, you are unlikely to be a 'worker' and cannot bring claims for unpaid wages in the employment tribunal.
- Short-term day-rate work without ongoing obligations points to independent contractor status, not worker status.
- The option to move from day rate to price work is a strong indicator of self-employment.
What this case shows
Two construction workers took on short-term work for Capital Contractors Limited, expecting to be paid a day rate of £200. After completing 4.5 and 5 days respectively, they were not paid. The company said the work was poor and they had to hire others to fix it. The workers brought claims for unauthorised deductions from wages.
At the heart of the case was the question of employment status. The workers were registered under the Construction Industry Scheme (CIS), had agreed a day rate, and were told they could move to price work after a few weeks. The tribunal found these facts pointed to them being independent contractors running their own business, not workers entitled to the protections of the Employment Rights Act.
What the company did right
Capital Contractors Limited successfully argued that the claimants were not workers. The key evidence was the CIS registration, the short-term nature of the engagement, and the option to switch to price work. The company also had a clear agreement that the workers were self-employed subcontractors.
What the workers could have done differently
The workers could have sought a written contract that clearly defined their status. They might also have considered bringing a claim in the civil courts for breach of contract, where the test for employment status is different and may have been more favourable. However, the employment tribunal has no jurisdiction over disputes between independent contractors and their clients.
Why this matters
This case is a reminder that not everyone who does paid work is a 'worker' in employment law. The distinction between a worker and an independent contractor is crucial. If you are genuinely self-employed, especially under CIS, you cannot use the employment tribunal to recover unpaid fees. Your remedy lies in the civil courts, and you should ensure you have a clear contract setting out payment terms and dispute resolution.
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