towards an employment relationship. The more freedom the contractor has about the methods of providing the services, the more likely that self-employed status will be justified. A second key determinant is whether there is mutuality of obligation. In simple terms, if the user of the services wants the contractor to do a particular piece of work, has the contractor got the power to say ‘no’? Also, does the user of the service have the right to decide not to offer work? If the answer to both questions is ‘no’, it is likely that the relationship will be deemed as an employment relationship. A third factor is the use of substitutes. The more
and on what basis and to organise the provision of substitutes, the more likely the relationship is to be regarded as self-employed. Simply stating in the contract that there is a right to use substitutes, but without there ever being any intention of doing so, won’t be enough. Another indicator is insurance. Who is providing insurance for the contractor? If it is the recipient of the services, it will point towards there being an employment relationship. Similar arguments apply to the supply of tools and materials of the trade. There are a large number of other factors which can be placed into the mix. HMRC has its own online questionnaire which can be filled in, and in relation to which it says, if the questionnaire is accurately filled in, it will accept its determination of self-employed status. However, those filling in the questionnaire may not always agree with the determination if it goes the other way! For medium and larger businesses, the responsibility for getting it right will be with them fromApril 6, but responsibility does not stop there. Agencies supplying contractors who are responsible for paying the contractor will often pick up any obligation to pay tax and National Insurance contributions as well. Also, contractors may not be very happy with the determination of those to whom they provide their services that they are employees. All in all, there are some choppy waters ahead l Nigel Tillott, head of
autonomy the c o n t r a c t o r has to decide w h e t h e r to use s u b s t i t u t e s
Nigel Tillott
employment law, Davies and Partners Solicitors. To find out more email Nigel.Tillott@ daviesandpartners.com or telephone 01454 619619
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