If the answer is ‘Yes’ to all of the following questions, then the worker is probably an employee:
- Do you provide all the person’s work and all his or her income, whether on an hourly, daily, weekly or monthly basis, so that the person is not free to work elsewhere as well as for you?
- Do you have a high degree of control over where, when and how a person’s work is done or carried out?
- Do you provide the bulk of the equipment and tools necessary to carry out the work?
- Is there no element of risk to the worker if some element of the job needs correction?
This means that you have certain responsibilities to this employee that you wouldn’t have for a self-employed person.
These include access to basic employment rights, including a contract of employment or statement of terms two months after they start working for you. You will also be responsible for paying National Insurance and tax contributions, as well as operating PAYE on their earnings.
If the answer is ‘Yes’ to all of the following questions, it will usually mean that the worker is self-employed:
- Can they hire someone to do the work or engage helpers at their own expense?
- Do they agree to do a job for a fixed price regardless of how long the job may take?
- Can they decide what work to do, how and when to do the work and where to provide the services?
- Do they regularly work for a number of different people?
- Do you pay your worker gross, that is, without the deduction of tax and National Insurance?
- Do you do not pay for any element of sickness absence?
- Does the worker provide his or her own tools and equipment?
- Is the worker responsible for correcting his or her own mistakes at his or her own expense?
It is worth noting that a worker can be both employed and self-employed at the same time in different jobs, and they can go from employed to self-employed from job to another.
It is up to you as an employer to establish whether workers are employed or self-employed, but you cannot decide which the worker is based on mutual consent. This is often done for self-employment to avoid tax on one or both sides and is known as being a “disguised employee”, something HMRC do not appreciate. A genuine employee/self-employed person must fulfil one of the sets of criteria set out above.
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Do you know what determines whether someone is deemed to be an employee or self-employed? In this article, we explain the difference between the two and what it means to your responsibilities.
Employed or self-employed – how to check a worker’s employment status