If you’re an agency or an agency worker, you may have heard of the term ‘hybrid model’, also known as ‘EDM’ or elective deduction model.
But what exactly is a hybrid model, and what does it mean for you?
Hybrid models engage workers on a self-employed basis, meaning that the workers have no rights and are not entitled to any of the statutory benefits that other workers are entitled to.
The most aggressive models deny workers’ holiday pay, pension, sick pay, maternity, paternity etc. Some do not even pay NMW.
Whilst such hybrid models might appear to be legal, it is wise to be wary of them.
A particular concern is whether or not you are genuinely self-employed in this scenario, i.e. operating as either a sole trader or through your own limited company.
If you aren’t genuinely self-employed, then your legal status would be “worker” which, by definition, incurs worker rights such as holiday pay, sick pay etc.
These would all bring with them potential additional costs to your agency or client, should you be successful at taking them to tribunal.
However, if you are genuinely self-employed and wish to remain so, then you can still engage with a provider to handle your payroll without becoming a fully-fledged employee, and all the benefits that entails.
Although, if you are genuinely self-employed, it would be unusual to make a conscious decision for your income to be taxed as employment income without the accompanying statutory employment benefits and rights.
More usually, the hybrid model is used by entities looking to cut costs and/or exploit their unwitting workforce.
It can be argued that the hybrid model does give an option for low-paid workers’ income to be taxed in a transparent way in scenarios where the on-costs of worker rights cannot be afforded.
The counter argument is an ethical one, whether such roles should be allowed to exist if the accompanying statutory worker rights cannot be provided.
With the advent Key Information Documents (KIDs), recruitment agencies are legally required to provide their workers with information regarding their employment status, tax status, deductions etc. We hope that these will prove useful in giving workers the information they need in order to make an informed decision about how their assignments operate. You can read more about KIDs here.