Recent legislative proposals continue to challenge the relationships between agencies and their temporary workers, particularly where those workers are self-employed. HM Revenue & Customs have been seeking to remove any ambiguity surrounding an individuals employment statusand they have taken another step towards achieving that goal.
Previously, the determination of a temporary workers employment status could be decided by giving them the ability to substitute themselves at any time. This was seen as a clincher in deciding whether a worker is self-employed. The new legislation removes this test leaving the ‘control test’ as the decider on the temps employment status.
The control test covers supervision and direction and where the agency or the end-user has control over ‘where’, ‘when’ and ‘what’, the worker is likely to fail the compliance test and be deemed as employed.
This is giving agencies something of a problem when deciding whether or not to subject these workers to PAYE & NIC and it may be necessary to review and consider each worker’s engagement terms.
Ultimately an agency may find it easier to migrate all self-employed workers to the payroll or to encourage them into using umbrellas or Personal Service Companies. Although there are underlying tax consequences and the latter may be too administratively clunky for the lower paid workers.