Self-employed and consultancy staff

Choosing the correct Employment Status

From time to time you may need to engage additional resources to take forward a short term, specific piece of work or to cover workload that varies over the year.

If you are engaging someone to do work for the University, you need to either:

directly employ them to do the work on an employment contract
or
contract them to provide a service (supplier). People who are providing a service are self employed and may describe themselves as a consultant or may operate as a personal services company.

It is important that the correct route is chosen and the appropriate internal procedures followed. Where the nature of the appointment is employment this means that right to work checks must be completed prior to work starting. Where the nature of the appointment is self-employment the procurement procedures must be followed including an employment status check to determine the correct tax status of the appointment. Failure to follow these guidelines can result in back payments, fines and in the worst scenarios loss of the University’s ability to employ international staff.

Work that would normally be carried out by an employee cannot be undertaken by a person on a self employed basis, and anyone engaged on a self employed basis will need to be able to provide a substitute person when they are unable to work.

Usually it will be easy to decide whether someone is an employee or self-employed. However, there will be a number of cases where it will not be so easy to decide.

The following is provided as guidance.

Guidance

An Employee	An independent contractor/self-employed worker:
Is subject to a degree of control by us about how to do the work accepting that most employees work with a degree of autonomy	Can work whenever and sometimes wherever they’d like, choosing to accept or decline work
Is obliged to do the work themselves and do the work we ask of them (within the reasonableness of the Job Description)	Controls their own method of work in delivering the contracted outputs
Uses our tools or other work-related resources.	May be part of a team but will not be an integral part of the University
Is an integral part of the University – meetings, away days, managing teams and organisation of work	Puts in bids or gives quotes for work and Is often (but not always) paid by the project or on a flat-fee basis and submits invoices for payment
Generally works for just one company	Uses their own tools and resources
	Is running a business with considerations for its financial performance and can work for multiple companies

Why does it matter? Because employees..	Why does it matter? Because independent contractor/self-employed workers...
Are subject to immigration legislation including completing right to work checks.	Must complete an employment status checker to confirm that they are eligible to pay their own tax and NI.
Are able to join the pension scheme.	Must maintain appropriate professional indemnity insurance.
Will be covered by our employment policies - this includes accessing the benefits (paid holidays, sick pay or maternity pay) but also may be subject to our disciplinary of misconduct procedures.	Must register for Self Assessment if they earn more than £1,000 from self-employment. (fig for earnings between 6 April 2017 and 5 April 2018
Have employment rights and can claim unfair dismissal.	Must be recognised as an external organisation when sharing data (UK GDPR).
Considered to be within the organisation from a UK GDPR view.	Subcontract may not be allowed under the terms of funding agreements.
Will have tax and NI deducted through payroll.

Determining employment status is not an exact science. The HMRC website provides guidance and reference to case law on employment status and outlines that each case should be considered across a range of factors rather than through a checklist.

If you believe that you require an employment contract, please see the range of employment contracts including contracts that accommodate temporary or variable demand. If you have any questions, do contact the People Directorate.

If you believe that you wish to engage someone on a self-employed basis, please follow this link to the Procurement webpages.

There are various ways that we can set up an employment contract with a new employee. These can be permanent or fixed duration, paid every month as claims based (if demand is variable) and can relate to a specific type of work. Please use the decision tree to find the contract type that best suits your needs.

The decision tree (PDF) also indicates what process you need to follow.