Contract Review Services
Contract Review Service
We offer a contract review service to assess you status (i.e. whether you are employed (IR35) or self-employed). In assessing your status we would try to address all of the following
Nature of Contract
We need to decide for each engagement whether your contract is in the nature of employment or self-employment
Right of substitution
An essential part of employment is personal service. If you have the right to send a substitute in your place, then you are not obligated to provide personal service. This will tend to suggest you are self-employed rather than employed. Therefore no hit by nasty IR35 rules.
If the relationship between the recipient of the services and the provider is one of master and servant then the recipient of the services has a right of control and the provider will be deemed to be employed. Therefore, try to ensure your contract is a contract for services (self-employment) rather than a contract of services (employment).
A common aspect of employment contracts is the obligation to give notice of termination a certain amount of time in advance. Try, therefore, to make sure your contract and working arrangements indicate that your contract will terminate on completion of the task you were retained to undertake rather than after a notice period.
Profitability from sound performance
An employed person will be paid a fixed salary and sound performance does not really affect that individual remuneration. A self employed individual will often have part of their fee retained until the task they have been retained to undertake has been completed successfully. This opportunity to profit from sound management and sound performance is an indicator of self-employment.
An individual who bears financial risk in providing his services is likely to be self-employed. If you suffer the risk of bad debts (i.e. unpaid invoices from your agency) then this is financial risk. If you purchase your own assets to enable you to provide your service, then this is financial risk. If you undertake to complete a task for a fixed fee and it takes longer than you anticipate, then this is financial risk.
Employees generally remain with an employer for a longer period of time than a self-employed person provides service to a client on an ongoing basis. Therefore, shorter contracts with a change of client will support your assertion that you are self-employed. However, longer contracts with the same client will not necessarily be damaging. It will depend on the other terms in your contract.
Absorption into the organisation
If an individual seems part of the organisation to which he provides services, he is more likely to be categorised as employed. Avoid being entitled to attend the clients employee Christmas party or staff canteen as these suggest you have been absorbed into the clients organisation. If you are retained to supervise employees of your client, this may also suggest you have been absorbed into the clients organisation.
Right to employee benefits
Employees are entitled to holiday pay, sick pay, maternity pay and a number of other similar things. The absence of the right to these in your contract will not on its own put you outside the grasp of IR35, but you will be right in the IR35 firing line if your contract DOES entitle you to any of these or anything resembling them.
Employees are usually paid a regular salary. While pay by the hour is not quite a fixed salary, the mention of timesheets will tend to suggest employment. Therefore, where possible, it is best to refer to remuneration in terms of outputs (deliverables) rather than inputs (hours or days).
Provision of equipment
Employees are provided with all the equipment they need to perform the duties of their employment. A self employed person obviously must provide their own. Where are you required to work at home and to use your own equipment, this will add weight to your assertion that you are self-employed.