Appointing self-employed workers
When appointing an individual to perform work, the matter of employment status is often an
issue; for instance the person may claim to be "self-employed" and will therefore not wish to
be paid for their services via the School payroll.
There are a number of reasons why an individual (or the employer itself) may wish to treat
certain people as self-employed rather than employees. However, the decision to be treated
as "self-employed" is not a matter of choice. It is a matter of fact, based upon a number of
objective factors within the terms and conditions of the agreement between the employer
and the worker.
When engaging a worker who claims to be self-employed, the employer must ask itself, "is this
person an employee?" Unless the person is clearly not an employee, as determined by
evaluating the indicators of employment and self-employment (see determining employment
status below), the employer must treat the individual as an employee. Failure to do so can
expose the employer to major contractual, statutory and financial risk.
Determining Employment Status : Indicators
The Pay Team will take into account a number of factors in determining the employment
status of workers. The main factors are below.
Self-employed
The individual is likely to be self-employed if the answer to at least one of the following
questions is "yes":
1. Can the contractor hire someone else to do the work, or take on helpers at their own
expense?
2. Can the contractor decide where to work, how to work, and what to do?
3. Can the contractor make a loss as well as a profit?
4. Does the contractor agree to take on the work for a fixed price, regardless of how
long the job takes?
If none of the above answers are "yes", the contractor may still be self-employed if the
answers to most of the following questions are "yes":
1. Does the contractor risk his own money?
2. Does the contractor provide the main items of equipment needed to do the job?
3. Does the contractor have to correct unsatisfactory work in his own time and at his
own expense?
Employed
The person is likely to be employed if the answers to the following questions are mostly "yes":
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BH 5 January 2010
1. Does the person have to do the work themselves?
2. Can the engager tell the person where to work, how to work, when to work and what
to do?
3. Can the person be moved from task to task?
4. Does the person have to work a set number of hours?
5. Is the person paid a regular wage or salary?
6. Can the person get overtime or bonus payments?
7. Is the person responsible for managing anyone else engaged by the employer?
What you need to do
Before engaging a contractor
It is thought that in the vast majority of cases, as managers you will be appointing staff as
employees via the usual recruitment processes, to be paid via the School payroll. However, in
the event that you decide to engage a self-employed contractor (or indeed you are informed
by a worker that they are self-employed), you should:
1.
2.
3.
4.
Complete a Pre-contract Checklist
Complete an assessment questionnaire (this should be completed by the LSE
engaging representative)
Complete a Contract for Services
Send these documents to the HR Pay Team
These documents will be forwarded to the Director of Finance and Facilities for authorisation.
Once approved, you will be notified and the individual can commence work.
Important: these procedures must be followed before the work is carried out. Failure to do so
is a breach of the Financial Regulations (section C13.6) and will result in delays to payments.
Please note: this information applies to self-employed individuals, not: limited companies,
external examiners/assessors*, one-off lecturers*.
* see “Special Cases” below
Guidance flowchart
The flowchart on the next page outlines the procedure for appointing self-employed
contractors.
Determining Employment Status – Additional Information
BH 5 January 2010
Is the worker currently paid by the LSE on
Schedule D (self-employed) basis ?
No
Complete precontract checklist
Yes
Is the value of the
contract over £8,000 ?
Yes
No
No
Seek
alternative
quotations
Do the invoices relate to
a current, approved
contract for services?
Download and complete:
Yes
1. Assessment Questionnaire
2. Pre-contract Checklist
3. Contract for Services
Send all paperwork to HR Pay
Send invoice
directly to HR
Pay
Wait for HR to advise on
status
Employee?
Self-employed?
Allow self-employed individual to
start working
Use standard
LSE Recruitment
process or raise
hourly contract
as advised
Send invoices to Pay when work completed
(including additional details as above)
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BH 5 January 2010
What to do if…
Self-employed contractor works for LSE currently
Invoices should be sent directly to the Pay Team if they are covered by a current contract for
services.
Not Self-employed?
If it is determined that the individual and the work they will be doing does not qualify for selfemployment status, then the Pay Team will advise you on the appropriate School contract to
raise.
Special cases
Guest Teachers
Guest Teachers should be appointed under a Guest Teacher contract and are considered
employees of the School. HMRC provides very specific guidance within it’s Employment Status
Manuals (Particular Occupations – Teachers, Lecturers and Tutors) regarding the engagement
of lecturers within educational establishments (ie LSE) for short assignments and in certain,
specific circumstances individuals may be treated as non-employees (self-employed) for tax
purposes.
This HMRC provision only applies to teaching or lecturing, not other types of work. Any
teaching or lecturing work that does not meet the below criteria will require a Guest Teacher
contract and the worker will be classed as an employee.
The criteria are:

Prior to giving the lecture, the individual has agreed to give it on not more than three
days in three consecutive months; or

The lecture is given as a public lecture. A public lecture is defined as one which
anyone can attend, is not part of a course or confined to a particular group or society.
If either of these criteria apply, payment should be requested via Finance Division on a
“Payment Request Form”
External examiners
External examiners engaged by the School for masters degrees and doctorates are generally
treated as self-employed. External examiner payments can be sent directly to the Finance
Division.
Limited Company
If you wish to engage a limited company, you should contact the Purchasing Team, Finance
Division. These are not “schedule D” and are therefore not subject to employment status
tests.
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BH 5 January 2010
Our service
The role of the Pay Team in this is to ensure that the School is compliant with HMRC
regulations. We are responsible for correctly determining whether contractors are selfemployed or whether they should be employees. We aim to offer a fair and prompt service to
those engaging workers whether they be employed or self-employed, whilst adhering to the
strict rules and regulations of HM Revenue & Customs.
We politely ask that if you consider appointing a contractor on a self-employed basis, to call
us first. This will ensure that person's payments are not held up longer than necessary.
Queries
Any queries regarding the status of contractors should be directed to the Pay Team on x6659
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BH 5 January 2010