Guidelines for Determining Employment Status of Service Providers

1. Introduction

This procedure provides guidance for the payment of Self Employed individuals, and University staff providing services not related to their employment.

Heads of Schools/RIs/Heads of University Services or nominated deputies /PIs/ budget holders who are engaging with individuals to provide services to the University should consult with the relevant Human Resources Manager to ensure that the correct procedure is being followed prior to an assignment being undertaken and to seek advice on an appropriate rate of reimbursement.  This process must be followed prior to the task being completed otherwise payment cannot be guaranteed.

The following guidelines are aimed at providing support and assistance in determining the employment status of those providing services to the University, both currently and in the future, are geared towards the establishment of good practice and minimising the risk of contravening HMRC regulations.  These guidelines must be considered and followed prior to the engagement of any service provider by the University.

2. Procedure

1. An Employment Status Questionnaire should be completed by the relevant budget holder in conjunction with the service provider and submitted to the relevant College HR Manager/Officer, along with any other supporting documentation relating to the request.
2. The HR Manager/Officer will undertake an assessment of each case and subject to the possession of sufficient information to make a determination in terms of self employment, the HR section will complete an Employment Status Indicator (ESI) at www.hmrc.gov.uk/calcs/esi.htm and print/retain the results.
3. The authorised Employment Status Questionnaire form, ESI and any supporting documentation will be logged on the Employment Status Questionnaire tracker.
4. The HR Manager/Officer will liaise with the relevant Head of School/RI/PI/Head of University Services or nominated deputy/ budget holder raising the original request to notify the  outcome.  Any duly authorised documentation will be returned to the relevant contact to enable the authorised  payment submission to be forwarded to General Ledger of the Finance Section, for their records to ensure future payment.
5. Where it is determined that the service provided does not constitute self-employment the service provider will be regarded as a worker, the originator will be informed by the relevant HR Manager/Officer accordingly and referred to the procedure for Atypical Workers www.gla.ac.uk/services/humanresources/policies/a-g/atypical_work/
   Where self- employment is established, care should be taken to record and retain the relevant ESI documentation as should employment status be questioned in the future, HM Revenue & Customs will require sight of the ESI.

Payments to self employed service providers are processed by the Finance Department in accordance with current HMRC guidelines (Her Majesty’s Revenue & Customs, formerly the Inland Revenue). If there is any doubt regarding whether or not a particular service provider should be treated as self employed, advice should be sought from the College HR Manager/Officer or the Financial Accounting section of the Finance Office.

3. Issues for Consideration

1. Should HMRC become aware that the University should have deducted income tax and national
   insurance contributions for any service provider  who they would consider to be an employee but the University has treated the service provider as self employed or not deducted the appropriate rates of income tax and national insurance contributions the
   University would be liable for:
   • Any unpaid tax or NI implications it should have paid on behalf of the worker
   • Interest on the unpaid tax and NI
   • Financial penalties
2. The University may be taken to tribunal or court by a service provider if they have been classed as self employed by the University    and should have been treated as an employee/ worker for employment rights (such as annual leave, sick leave etc)
3. An employment contract is considered as a ‘contract of service’ in which a worker will personally provide work or services for the University. A ‘contract of services’ is when a company or a self employed service provider/ consultant undertakes to provide services for another organisation.

Remember individuals can be self employed in all other aspects but may be classed as an employee of the University subject to the satisfaction or otherwise of certain criteria.

Human Resources
21 April 11