Self-Employed

Not everyone who works for a business is an employee.

Some individuals are self-employed. Determining whether an individual is an employee or self-employed has a significant legal impact. This is predominantly because of the level of protection afforded to employees but also a business’s liability to HM Revenue and Customs in respect of tax and national insurance contributions. 

Where mutual obligations exist, (namely an “employer” is obliged to provide work to an “employee” and the “employee” is then obliged to personally carry out that work, while subject to the control of the “employer”), these are strong indicators that the individual will be an “employee”. They will be paid a regular wage or salary, less the statutory deductions and be employed under a contract of employment. 

However, in the absence of such mutual obligations, it may be the case that the individual is self-employed. We are aware of the factors that both tribunals and HM Revenue and Customs consider when determining the status of a worker and can advise upon these in accordance with your arrangements. 

Businesses who consider a person to be self-employed are recommended to clarify such status in a consultancy or service agreement. This provides written evidence as to the arrangement agreed between the parties and can help reduce the risk to businesses should the individual worker or HM Revenue and Customs challenge the status. 

While fundamentally confirming the self-employed status, the document must also outline the key responsibilities of each party in respect of many areas including the payment of tax, public liability insurances, provision of equipment, delegation of work, holidays and sick pay and termination arrangements. Without such written clarification, the position is less clear and leaves the business vulnerable to a tribunal claim or interrogation by the taxman.