EMPLOYED OR SELF-EMPLOYED
Guidance for schools
Information in this leaflet includes:
1) What do we mean by ‘Employed/Self-Employed’?
2) How does this relate to schools?

The most common areas of employed/self-employed
in schools
3) What do schools need to do?
 Details of when payments can be made gross or
when they should be processed through payroll
4) Employment Status Questionnaire
5)Section on how to deal with self-employed Teachers,
Lecturers, Examiners, Instructors etc. (National
Insurance Implications)
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Employed or Self-Employed Status
1)
What do we mean by employed or self-employed?
An employed person is paid via the payroll and pays PAYE income tax and Primary
Class 1 National Insurance Contributions (“NICs”) by deduction from salary.
A self-employed person is taxable under Schedule D and is required to account for
his/her own tax liabilities in two lump sum payments each year. In addition, he/she is
liable to pay both Class 2 and Class 4 NICs.
HM Revenue & Customs (“HMRC”) will normally prefer payments to individuals to be
made via the payroll system so as to ensure that PAYE and NICs are deducted at
source. However, individuals will often attempt to “opt out” of the PAYE system by
claiming to be self-employed.
A person who is employed will normally work regularly for one (possibly more)
employers and will:
-
perform work that the employer requires to be carried out;
carry out the work on the employer’s premises;
work at specific times set by the employer;
receive a regular weekly wage or monthly salary;
not have any financial stake in the employer’s business;
work under the supervision of/or report to the employer or to his
representative.
A person who claims to be self-employed will generally:
-
have a say in how the work is done;
have invested his/her own money in the business;
be responsible for meeting any losses as well as receiving any profits.
provide their own major items of equipment.
be free to hire others to do the work they have taken on;
be required to complete or re-do any unsatisfactory work in their own
time and at their own expense.
work without supervision;
not work alongside an employee carrying out similar duties.
In some cases, a person claiming to be self-employed may be able to provide details
of their accountant and tax office. However, such evidence cannot be regarded as
conclusive. Simply because a person can, legitimately be regarded as self-employed
in one capacity, it does not necessarily follow that he/she can be so regarded in every
job that he/she performs.
When engaging someone claiming to be self-employed you will need to look at the
job as a whole, and each job must be judged on its own merit. HMRC places the
responsibility for the determination of employment status on the person or body for
whom the work is performed – that is to say the unit, school or the Council. This
means that, if we get it wrong we pay the tax and NICs that should have been
deducted, together with interest and penalties. We will be unable to recover these
amounts from the individual we have paid.
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Office Holders
There is another category of worker classed as “office holder”. This type of worker
becomes an office holder when the local authority has a statutory duty to appoint him
or her. Therefore whilst these individuals would not be classified as employees they
are required under HMRC legislation to be taxed at source and therefore would need
to be paid via our Payroll department. The types of role this would normally cover are
the independent members of adoption and fostering panels, elected Members.
If you require further information please contact HR and Payroll Services.
2)
How does this relate to schools?
It is possible that your service unit may take someone on in one of the following
occupations and that the person will claim to be self-employed:





Cleaner
Gardner
Supply teacher
Window Cleaner
Painter/decorator (see end note)
You should treat any such claim with some degree of scepticism and not simply
accept the claim without further consideration.
3)
What do schools need to do if a person claims self-employed status?



If you are unsure of their status complete the attached questionnaire to
determine employment status
Keep the completed questionnaire on file for evidence in case of a
compliance visit by HMRC
If you decide that the person is employed, send the invoice with the
invoice pro forma completed and authorised to Payroll Services to set
them up as a sessional employee on the Payroll System
Watch out for invoices that are sent in the name of a Limited Company but
where it is requested that payment should be made to an individual. In such a
case you must complete the questionnaire and treat the payment as if it were
made to an individual rather than a company.
Tip: How much ‘Control’ do we have in the task to be completed? This can be a
good indicator of employment status.
Note:
Be aware that this also applies to workers in the Construction Industry. For
example, if you take on a painter/decorator and you supply the equipment to do
the job (ladders, tools), supervise the job etc, you will need to apply the same
rules. That is to say, complete the questionnaire to determine their status.
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If you are due to make a payment to an individual via an invoice but you are unsure
whether or not this is correct, please complete the questionnaire to determine
employment status. If you are still unsure please contact Richard Goold, HR and
Payroll Services, Tel. No. 020 8583 5666 or via e-mail
Richard.Goold@hounslow.gov.uk
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4)
Employment Status Questionnaire
Name of individual for whom questionnaire is being completed:
…………………………………………….
Address: ………………………………………………………………
…………………………………………………………………………..
…………………………………………………………………………..
NI Number if available: …………………………………………….
School…………………………………………………………………
Person completing questionnaire:……………………………….
EMPLOYED OR SELF-EMPLOYED
STATUS QUESTIONNAIRE
This questionnaire is designed to assist units and schools in identifying
whether a person has self-employed or employed status. You may need to use
this form to justify a decision taken, in respect of a person’s employment status
if called upon by HMRC. This form should be filed with your Creditor records.
1. Give a full description of the nature of the duties the person is undertaking?
........................................................................................................................................
........................................................................................................................................
........................................................................................................................................
........................................................................................
2. Does the person work alongside other persons doing similar duties?
YES/NO
3. Are those other persons treated in anyway as employees?
YES/NO
4. If you have answered “yes” to questions 2 and 3, what are the differences in the
terms of employment and also in the contractual and working arrangements?
........................................................................................................................................
........................................................................................................................................
....................................................................................................
5. Can the person choose or refuse to carry out any particular piece of work
undertaken in your school?
YES/NO
6. Is the person free to hire and pay their own assistants?
YES/NO
7. Is any part of the person’s work checked by a supervisor or manager?
YES/NO
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8. Has the person a particular skill or experience which your school is buying in?
YES/NO
9. How is the person paid? Hour/Day/Week or by an agreed Set Fee for the job?
10. Do you issue payslips or does the person invoice your unit or school?
Payslips/Invoiced
11. If the person is claiming to be self-employed, in respect of the work undertaken for
your school, does he/she complete all the tasks at your premises rather than at
his/her own offices?
YES/NO
12. Does the person have to correct unsatisfactory work in his/her own time and at
his/her own expense?
YES/NO
13. Does the person meet all of his/her own expenses and overheads in respect of
this employment? This includes all of the necessary equipment to do the work.
YES/NO
14. Does the person claiming to be self-employed have Public Liability Insurance? (If
so attach details to this form as supporting evidence).
Please note that a self employed contractor must have a minimum of public liability
insurance for £5 million.
YES/NO
15. Individuals who do not have their own public liability insurance must be treated as
employees to ensure insurance cover.
Conclusion
Self-employed
If the person is undertaking a specific project or task and your school is buying in their
expertise this may indicate that the person is self-employed. The person is usually
free to complete the task in the best way he/she feels fit. They are using their own
equipment and are free to hire and pay their own assistants if necessary. An agreed
price is set for the job and they will invoice your unit or school for payment.
Employed
If the person is working with other employees doing similar duties and the work is
supervised by a manager, this suggests that the person is employed in the workplace.
The person would normally work set hours and receive fixed wages for the hours
worked. The person is not responsible for supplying any of their own equipment
required to complete the job and risks no financial loss if the project should fail or run
over the agreed period.
If you would like further guidance on whether a person is employed or self
employed please contact Richard Goold, Telephone No. 020 8583 5666 or email:
richard.goold@hounslow.gov.uk
As a result of completing this status questionnaire:
I am happy this individual is self employed:
I have referred this individual to be paid via payroll:
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

National Insurance contributions for ‘examiners, moderators and invigilators,
lecturers, teachers and instructors’.
Extract from HMRC website covering this regulation can be found at:
http://www.hmrc.gov.uk/manuals/esmmanual/esm4503.htm
Lecturers, teachers and instructors:
If you are employed under a contract of service you are an employee and liable to
pay Class 1 National Insurance contributions.
There are special rules which govern your employment status for National Insurance
purposes. Even if you are not
 employed under a contract of service, or
 in an office with income chargeable to income tax as employment income
you are treated as an employee if
 you are employed as a lecturer, teacher instructor or in any similar capacity, or
 your employment takes place in an ‘educational establishment’ by any person
providing education, see page 7 and
 you give the instruction in the presence of those being instructed, or your
employment is with the Open University, and
 you are paid by, or on behalf of the person providing the education.
You are not treated as an employee if
 you have agreed, before giving the instruction, to give it on not more than three
days in three consecutive months, or

you give the instruction as a public lecture which anyone can attend (that is,
not part of a course, or confined to a particular group or society).
Note: HMRC make the Council responsible i.e. the school/service area, to report
these individuals correctly, this means we pick up any penalties for incorrect
reporting.
They will sway more to the side of reporting the individuals via payroll to
ensure collection of any Tax or National Insurance contributions.
Workers falling into the employee category as outlined above must be paid
through the payroll to ensure correct NI deductions.
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