Self-employed or PAYE

[Merryoldgoat]

I was hoping there might be someone who is an expert in employment law who can clarify something for me.

I work for a school and we have a number of sports coaches who work for us on a annual contract basis.

We specify at the beginning of the year the hours they are to work, the hourly rate which is to be paid.

They report to the Head of Sports who confirms their hours for the month and they are paid monthly via our payroll.

I have one sports coach who is insisting that he has his own limited company and that he can be self-employed and paid via an invoice. I don't believe this is true. I believe that he is an employee. I've searched online and looked at HMRC and there are a few grey areas (of course) but essentially these are the key points:

We dictate the hours he works
He is reports to us
He cannot send someone else in his place
We dictate what he teaches to the children

He keeps telling me about all the different 'revenue streams' that he has and sources and he believes because he 'sourced' this role (I have no idea what he means - we advertised) it's the same.

Can anyone clarify for me please?

Thank you.

He sounds like an employee to me. Check with HMRC.

What are the grey areas?

Do you pay him holiday pay and other employee benefits?

Does he supply his own equipment?

He wants to be self employed because it benefits him financially. On the information given, it would be reasonable to treat him as an employee.

I think IR35 will apply to him, there is a tool where you can check if he is classed as an employee or not.

www.gov.uk/guidance/prepare-for-changes-to-the-off-payroll-working-rules-ir35

We do pay holiday pay at the end of the school year based on the hours they worked pro-rated.

He does not provide his own equipment

Definitely an employee then!

@TeaStory

Thank you for your link - I had a look and and he's definitely an employee.

I also sent it to him so he can be convinced once and for all and stop turning up at my office moaning.

@Merryoldgoat it was @TheMerryWidow1 who posted the link, but I’m glad the thread was helpful - hopefully he will stop moaning now!

no worries @TeaStory happy she got it sorted. thanks

Sorry both - I’m very frazzled at the moment!

Generally speaking, you are an employee if you only work for the one organisation. I'd say in this case, that he could be right and is freelance. Even though the hours are set, he has taken the role on as a contract rather than as a job, if you see what I mean. The sending someone to work in your place is a bit of a grey area, because many people are a one-man-band type of business and wouldn't have someone to send anyway.

Lots of freelance dance teachers, musicians and pianists etc are in the same boat. They are expected to work certain hours, but they are usually working for a number of different organisations during a period of time, and they couldn't really become an employee at each.

But he works under our supervision, is paid an hourly rate, we direct where he works and what he teaches.

We have people who run clubs or teach peripatetically but it’s a completely different arrangement.

Also, he’s treated like an employee - he’s given lunch, can use our facilities etc without restriction like a staff member.

Generally speaking, you are an employee if you only work for the one organisation

I’m afraid that’s not true. HMRC looks at each contract individually. You could work for just one organisation and be outside IR35, or work for multiple organisations and be inside IR35 for some or all of them.

It is all about how how you go about doing the job, key areas being around right of substitution, mutuality of obligation and employee benefits.

In this case if he gets holiday pay then he is an employee.

He should give up the holiday pay and other benefits of employment. Then he’s self employed.

@BubblesBuddy

He would give those things up but I think that the way he works means he’s an employee so it’s moot.

The rules on payrolling Personal Service Companies are being extended from the public sector to private sector next year anyway, so he might have to get used to this. What kind of school are you working in?

Did you use HMRC's Check Employment Status Tool? If you print off the outcome (having answered the questions correctly) and keep it on file HMRC won't contest the result, either way. Although it is slightly biased in HMRC's favour and he's technically not obliged to use it. But it would have to be a compelling case to argue against it.

Does he have the right to send a substitute? I assume not. Off the top of my head that's the only remaining point he might have been able to argue on, but the rest of it is pretty compelling for employment.

Would people who don't know his contract think he's a member of staff based on how he's treated and presented, and being an integral part of the school?

It does sound on the facts that he's an employee unless there's some kind of massive deal breaker you've been holding back. People can have multiple employments after all, although I see why he's raising the fact he does work elsewhere - only providing services to one place tends to be the first question in these cases before looking at hourly rates etc. It's harder to argue you're not an employee if you're dependent on one "customer".

Maybe his advisers haven't given him the clearest/best advice and that's why you're getting more aggro because he genuinely doesn't understand?

Definitely no right of substitute.

He would be seen as a staff member - he writes reports, kids call him ‘Mr X’, he has lunch in the staff room (provided by us). He does what we ask, when we ask at the location we specify.

The other things he does is run external after school clubs and media sports consulting - they’re totally different in nature to the work he does for us.

I did use the HMRC tool and it concurred he’s an employee so I’ll do it again and print the results.

We’re a private school.

We have another coach who additionally provides an after school club: he’s paid PAYE for coaching and invoices for the club as they are distinctly different offerings.

Don't guess, call HMRC or ACAS