Indicators of Self-Employment (As Opposed To Employment)

1. If there is a contract for services (engagement of a self-employed worker), and not a contract of employment. To ensure as far as possible that there is a contract for services, the contract should avoid any terms which indicate employment, such as holiday, sickness, and disciplinary measures etc.

2. Appropriate wording used in the contract and elsewhere to describe the relationship. Although not decisive, this can be of some importance, so for the worker to be more likely to be regarded as self-employed, they should not be referred to as an “employee” and he or she should be paid a fee, not a salary or wage.

3. There is no “mutuality of obligations” (see information page above: Indicators of Employment), and the client/employer has little or no control over the worker. In this case, the worker is more likely to be regarded as self-employed.

4. Further, a worker is probably self-employed if most of the following factors are present. The more of these that apply, the more likely it is that the worker is self-employed. Self-employment may be indicated if the worker:

• is in business for him/herself, and is responsible for the success or failure of the business;
• risks their own money;
• uses their own money to buy business assets and cover running costs;
• provides all or the main tools and equipment for their work;
• can make a loss or a profit;
• can decide what work they do and when, where and how to do it;
• decides on timescales;
• has the right to hire someone else to substitute to do the work (see “Personal service as an important indicator of employment” in information page: Indicators of Employment). However, note that, as mentioned in information page: Working Through an Intermediary Company, IR35 legislation requires you to ignore any such right of substitution in the context of IR35 where a worker does not actually exercise that right;
• is responsible for remedying any unsatisfactory work in their own time and at their own expense;
• agrees a fixed price for their work with the business engaging them, i.e. the amount paid does not depend on how long the job takes to finish;
• is permitted to work for more than one client;
• regularly works for a number of different people.