Are you employed or self–employed or are the people that work with you employed or self-employed? This is a question that some people have their own answer to but here are some guidelines that will help you determine the real status of someone that you engage.
If you answer ‘yes’ to the following questions, you will be deemed to be an employee:
1. Do you work set hours, or a given number of hours a week or a month?
2. Do you have to do the work yourself rather than hire someone else to do it for you?
3. Can someone tell you at any time what to do, when to work or how to do the work?
4. Are you paid by the hour, week or month?
5. Can you get overtime pay?
6. Do you work at the premises of the person that you work for, or at a place or places that they decide?
7. Do you generally work for one client at a time, rather than having a number of contracts? This one seems to be the one question that everyone remembers but it is only one of 13!
If you answer ‘yes’ to the following questions, you are probably not an employee:
1. Do you have a final say in how you do the work for the client?
2. Can you make a loss on a contract?
3. Do you provide the main items of equipment you need to do the job for the client not just the small tools many employees provide for themselves?
4. Are you free to hire other people on your own terms to do the work you have taken on?
5. Do you pay them out of your own pocket?
6. Do you have to correct unsatisfactory work in your own time and at your own expense?
This simple questionnaire can help you determine whether or not someone is an employee or self–employed. It must be said that these questions and the answers are a good guide but if not all the answers point to employed or self-employed status then you might need assistance in determining the ‘real’ status of someone and what problems this may give you if the answers point to employment and you have been paying these people gross. It is worth sorting the problem out, well before HMRC get to know the position.
By David White a Partner in Charterhouse, based in Beaconsfield.
Member since: 16th May 2013
David White is an equity partner in Charterhouse a practising firm of Chartered Accountants based in Beaconsfield and Harrow. David is Charterhouse through and through having been with them for 30 years...