Checking employment status

DETERMINING EMPLOYMENT STATUS

It goes without saying that the determination of a person’s employment status is important in respect to their tax position and employment rights.

Broadly speaking, an individual will fall into one of three categories;

Employee
Worker
Self-Employed

The HMRC have taken steps to make it clear as to what they see as the distinction between the three categories of employment, however it still requires careful assessment and consideration of the facts and the law to establish the status of an individual. An individual who is self-employed will be operating under a contract for services and NOT a contract of service.

HMRC have provided a wealth of information, clear guidelines and rules associated with clarifying how employment status is determined. As they see it there can be NO excuse for not being clear and more importantly correct in your status assessment and subsequent treatment for tax purposes of those that work for you.

HMRC have invested heavily through better systems and policing to clamp down on what they see as ‘false self-employment’ and the avoidance of tax and NI by both companies and workers. Worker employment status is no longer a matter of choice.

Why not check your workers situation NOW, just complete the form to the right and take the test, in a discreet manner, maintaining your confidentiality and privacy. You will quickly find out if your workers are at risk of being classed as employees - PAYE. Not only that but we will give you a FREE report that explains why your workers maybe at risk.

If you prefer the same test is on the HMRC's own website - https://tools.hmrc.gov.uk/esi/screen/ESI/en-GB/summary?user=guest

So what if you are at risk? Well we are here to help you and your company, if you want us to. We offer help and advice on how you can legally maintain a self-employed workforce within the new laws and regulations. Our advice is free and there is no obligation to do anything unless you really want to. Call today on 0208 901 2914 or click the 'Request A Call Back' button below, we are here to help you. Thank you.

If you would prefer that we call you back, then click the button below and one of our team will be in touch shortly.

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CHECK YOUR WORKERS EMPLOYMENT STATUS

An overview of the guidance available from HMRC

They are employed

You tell them what, when & how you want them to work
They bear no financial risk, they are guaranteed their pay
The worker does not have the right to substitute someone to do their job
You can move them from job to job, place to place
You pay them overtime and bonuses

To illustrate this distinction consider the case of Byrne Brothers (Formwork) Limited –v- Baird (and others) - 2002.

The Employment Appeal Tribunal focused on three areas:

1. Personal service: Where individuals looking to provide their services personally? Clearly if the right of substitution could be proved then this would show that the individual was not required to provide their services personally.

2. Business undertaking: Was the individual carrying on a business undertaking? To be considered are; the exclusivity of the arrangement and the degree of control exercised.

3. Mutuality of obligation: Was there a mutual obligation between the “employer” and the individual?

In the case of substitution the contractual right must exist and does not necessarily need to be exercised as long as it can be proved to be a genuine right. The tribunal firstly needs to determine if there is a status issue and decide then if they have the jurisdiction to hear an individual’s claim. If it is found that the individual is neither a worker nor an employee then it is outside their jurisdiction and should be heard by the County Court.

Recently, in Autoclenz Ltd –v- Belcher, the Supreme Court it was found unanimously that the ‘true’ underlying agreement was not as expressed in the written terms, the Courts and Tribunals should have regard to the true agreement, what is actually happening and not what was written. In the same way the HMRC is looking to use this to facilitate successful prosecutions in the courts, termed as they see it ‘see through test’. In essence what is actually happening not what is written in the contract.

Employment Tribunal’s will often look at how the individual Registered his/her tax position. So if an individual registers as CIS for example this demonstrates they are looking to provide services on a self-employed basis.

For an individual to be paid by a Contractor as CIS they must believe that they are genuinely self-employed. It is complicated and not straightforward. It starts with both the contractor and the self-employed worker operating their working relationship, day to day in a genuine subcontract manner, then supported by having correctly constructed and tested contractual agreements backed by proper systems in place to support the individual terms means you remove the risks of a court finding against you.

Aggregate Partners is there to provide this as well as indemnification through our insurances so you have total peace of mind that you are secure, protected and safe from risk.