1. IAgSA Annual Conference Employment and Service Agreements
4 March 2017

2. About me Alan Dark, Legal Director
Alan advises on employment law. His work includes acting for a number of agricultural and estate clients in connection with traditional employment issues, such as contract formation, discipline and dismissal, TUPE, redundancy, sickness and capability. He has also been asked to contribute to agricultural publications on employment issues, including Farmers Guardian.

3. Points to Cover Status: IR35 – intermediaries The service agreement
Employee
Worker
Self-employed
IR35 – intermediaries
The service agreement

4. Status Why important? Recent focus: BEIS OTS
Work and Pensions Committee
Is status relevant to you?
Rights
Tax

5. Status, Definitions and Distinctions
An employee is defined as:
“an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment”. Section 230(1) ERA
Contract of employment means:
“a contract of service or apprenticeship whether express or implied, and (if it is express) whether oral or in writing”. Section 230(2) ERA

6. Worker Status A worker is:
“an individual who has entered into or works under (or, where the employment had ceased, worked under):
a contract of employment; or
any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.” Section 230(3) ERA

7. What do the Cases Say: Worker
Personal service
Business undertaking
Mutuality of obligation
Clarkson v Pensher Security Doors Limited (2009)

8. Significance of the Distinction
Some core legal protections apply only to employees:
Unfair dismissal
Statutory redundancy payment
Liability insurance
Statutory duties – health and safety

9. What if Self Employed for Tax Purposes?
Autoclenz v Belcher (2011)
Review by HMRC had determined the individuals to be self-employed but the Supreme Court decided that they were in fact employees

10. Could you be an Employee?
Unlikely in majority of cases. Need as a minimum:
Personal service
Control
Mutuality of obligation
Could you be a worker?
Possibly
Pimlico Plumbers Limited & Mullins v Smith (2017)
Aslam & Others v Uber BV and Others (2015)
Dewhurst v Citi Sprint UK Limited (2016)

11. IR35 – Engaged Through an Intermediary
Using personal service company
HMRC Guidance - similar to employment status:
Personal service
Mutuality of obligation
Right of control
Right of substitution and engagement of helpers
Provision of own equipment
Financial risk
Opportunity profit
Integration
Employee type benefits
Mutual intention

12. Reducing the Risk of IR35 Applying
Contract with the client:
Include a right of substitution within the contract
Avoid an obligation to provide and accept work
Be subject to as little control as possible
Where possible, structure contract by reference to completion of project or piece of work rather than duration
Include some element of financial risk
No integration into client company more than necessary
Provide own equipment
State contract not intended to be one of employment

13. IAgSA – Example Service Level Agreement
Contains many terms indicating true relationship is sub-contractor / self employed status:
Accounts software and other programmes
Substitution
Comply with money laundering requirements
Consider:
Payment terms
Expenses

14. Close & Questions

15. Contact us Alan Dark Legal Director T: 0121 631 5337 M: 07885 989 002E: