Self-employment

To determine whether or not a person is self-employed, the Employment Tribunal will consider some key features of a genuine self-employment arrangement. This is different from what HMRC takes into account to make the same determination. In the Employment Tribunal, you are self-employed if:

  • You can and do arrange for and pay a substitute to carry out your work when you are unwilling or unable to carry it out. This is called the right of substitution in which there should be very limited restrictions on your right to send a substitute. For example, there may be a stipulation that the substitute has certain qualifications or licences, but otherwise the company you are contracted with has no right to reject the substitute you provide.

 

  • There is equal bargaining power between you and the company  – for example because of your specialist skills.

 

  • You are clearly in business on your own account, providing your services to others and marketing your services broadly.

 

  • You take a financial risk in the contractual arrangement (for example payment is only made on satisfactory completion of the project) and you have indemnity insurance.

 

  • You decide how and when the work is done – there is little day to day control or line management by the company you are providing your services to.

 

  • There are no or few restrictions on your business outside the arrangement with the company. If there are restrictive covenants such as non-compete clauses then this suggests an employment relationship rather than a self-employed one.

 

  • You are not integrated into the company you are providing your services to, so you do not represent the business or have to comply with a staff handbook in the same way as employees.

  If all these are present then you are self-employed and not entitled to any employment rights. If not, or if some of them are missing, then you could be an employee or a worker, and entitled to full or partial employment rights.   See: Employment Rights of Workers and Employees How to work out if you are an employee or self-employed