Who is an employee.
WHY IT MATTERS
Employees attract obligations that contractors do not.
WHAT THOSE OBLIGATIONS ARE
Tax deducted at source Pension contributions, above defined thresholds Other statutory contributions Leave entitlements Notice and termination protections
WHAT DETERMINES STATUS
The substance of the relationship, not the label in a contract.
WHAT FACTORS TYPICALLY MATTER
Control over how work is done Whether a substitute may be sent Integration into the organisation Who provides tools and equipment Whether the person bears financial risk Exclusivity Regularity and duration
WHAT SUGGESTS EMPLOYMENT
Fixed hours Direction over method Working only for you Payment regardless of output Using your equipment and premises
WHAT SUGGESTS CONTRACTING
Control over method Several clients Own equipment Payment for outcomes Ability to substitute
WHAT MISCLASSIFICATION PRODUCES
Back taxes and contributions Penalties Employment claims Personal exposure for officers, in some cases
WHAT TO DO
Assess honestly, and document the reasoning.
WHAT TO REVIEW
Long-standing contractor arrangements.
WHY
They drift toward employment over time.
WHAT TO NEVER DO
Label someone a contractor while treating them as an employee.
