Question:

Someone I am thinking of employing says she is self-employed. Do I still have to put her on Payroll?

A worker’s employment status, that is whether they are employed or self-employed, is not a matter of choice. Whether someone is employed or self-employed depends upon the terms and conditions of the relevant engagement.

For tax and NICs purposes, there is no statutory definition of a contract of service or of a contract for services. What the parties call their relationship, or what they consider it to be, is not conclusive. It is the reality of the relationship that matters.

As a general guide as to whether a worker is an employee or self-employed; if the answer is 'Yes' to all of the following questions, then the worker is probably an employee:

· Do they have to do the work themselves?

· Can someone tell them at any time what to do, where to carry out the work or when and how to do it?

· Can they work a set amount of hours?

· Can someone move them from task to task?

· Are they paid by the hour, week, or month?

· Can they get overtime pay or bonus payment?

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 risk their own money?

¨ Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves?

¨ 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 they have to correct unsatisfactory work in their own time and at their own expense?