The new Agency Workers Regulations 2010 are designed to give temporary agency workers equal pay and employment conditions after 12 weeks, as they would have received if they had been employed by the hirer.
Although the regulations have been designed to give temporary agency workers more employment rights, there is a risk that contractors will only use an agency worker for a short period. This will result in a volatile market for temporary agency workers and could force many of them out of work.
As a result of this many temporary agency workers are deciding to register as self-employed in order to avoid the Agency Workers Regulations 2010 and to take advantage of potential tax and national insurance savings. However a workers employment status is not a matter of choice and HM Revenue and Customs can therefore challenge the self-employed status should they believe it to be incorrect.
HM Revenue and Customs uses a series of tests to check the employment status of a worker. To verify that a worker is self-employed they would expect some or all of the following to apply:
– Right of substitution The worker can send somebody in their place to carry out the work should they not be available.
– Provision of own equipment A self-employed worker would ordinarily use their own equipment.
– Financial risk The worker risks their own money by buying equipment, materials and incurring running costs. An employee would normally not be expected to risk their own capital.
– Opportunity to profit As fixed price contracts are normally in operation for self-employed workers they have the opportunity to increase their level of profit by completing the work quickly and efficiently.
– Right of control The worker controls how, when and where the work is carried out.
– Working for different people Someone who is self-employed will regularly work for a number of different people.
– Correction of unsatisfactory work The worker would be expected to complete unsatisfactory work in their own time and at their own expense.
The above tests are only a guide used by H M Revenue and Customs. There are other indicators of self-employment and each case needs to be assessed on its own merits.
If you would like any advice or assistance in determining your employment status we would be more than happy to help.