Chapter 24 - Employed or Self-Employed Flashcards
Introduction
Distinction between the two is based on HMRC practice and case law. Employment status is not a matter of choice. It depends on the terms and conditions of the engagement.
Determining Employment Status
There is no single test governing the question of employed or SE’d.
Factors to Consider
Mutuality of obligation
Right to control
Provision of own equipment
Right of substitution and engagement of helpers
Financial risk
Opportunity to profit
Degree of integration into the organisation
Right to terminate the contract
The number of paymasters
This is not exhaustive but it does include the most important criteria
Mutuality of Obligation
Where an engager is under an obligation to provide work and the worker is under an obligation to accept the work and to perform tasks asked him, it usually points to employment.
The existence of any obligation will usually be obvious from any service contract between the parties.
Right of Control
In an employment relationship, the employee has little control on what they do day-to-day. It’s more likely employment where a worker is told what to do. Self-employed people control their own work mostly
Provision of Own Equipment
Who provides the tools? Employees rarely have to provide equipment. Someone SE’d will be responsibly for their own equipment
Right of Substitution and Engagement of Helpers
An employee can’t send a substitute in their place or be engage the services of a helper or assistant
Financial Risk
Individuals who risk their own money on ssets for the job or paying running costs, overheads and such are almost always self-employed. Self-employed must also quote the price of work, risk of making a loss is a good indicator
Opportunity to Profit
If a person’s profit or loss is tied to ability to reduce overheads, and work effectively, they’re likely self employed.
Degree of Integration
If you have a desk, computer, company email etc, you’re employed.
Right to Terminate Contract
A right to terminate an engagement with written notice is more common for employment. If a worker provides services for numerous businesses they are likely SE’d
