Are you employed or self-employed, the devil's in the detail

Employment status over whether you’re employed by your clients or self-employed is not simply a matter of choice, it’s defined by HMRC. There are multiple articles and organisations which are categorically stating the employment status of Paid Carers (Personal Assistants/ Care Workers) but, as with most things – the devil is in the detail.One thing that it is important to note, is that you can be both employed and self-employed at the same time.  So, for one client you could be an employee and for others, at the same time, be self-employed.

Why this is Important?

If the employment status is wrong (generally if a client has a Paid Carer with whom they have contracted as self-employed, but actually they are considered ‘employed’) then the individuals and their employers may have to pay unpaid tax and penalties.  This could result in significant costs for your clients (and you).   If you are setting up as a paid carer and were intending to be self-employed, then it is important to check that you meet that criteria, preferably using the HMRC employment Status Checker to give you a ‘certificate’ stating this to give to your clients. 

Why this is not straightforward

[ADS]We know that HMRC are concerned about this area and have recently said that they feel Personal Assistants (PAs) are generally employed, however YtB feel this may be because they understand PAs to be people who generally work with one client pretty much full-time.  It's clear that someone is employed by the service user where they are working multiple hours per week for just one person. Even when someone is just working a few hours and just for one person the conclusion is likely to be that they’re employed rather than self-employed.YtB feel that it’s less clear where someone is working for multiple clients each week providing just a couple of hours support per week per client (which is what many of the Paid Carers who use our site do).  In that instance it’s hard to see how you could be employed by 8-10 different employers, imagine trying to get approval for a holiday from everyone at the same time!

How do I work out if I’m Employed or Self Employed?

HMRC guidance states that someone is likely to be employed if: 

HMRC Guidance		Things to think about
They have to do the work themselves (ie they can’t send someone in their place)		Unless you are CQC registered (or you are not providing a regulated activity) then you will not be able to send someone in your place.
You are told when, where and how to work		In the majority of cases Paid Carers are told where to work – generally in the clients house, or taking the client to where they want to go to. Most clients and Paid Carers agree between them when the care/support will be provided Who decides how the work is carried out – is the client the person who tells you exactly how to carry out a task to reach the outcome, or do you use your knowledge and experience to decide how best to achieve the outcome.This is a critical difference between employed and self-employed.
Someone can move you from one task to another		Can a client (or their family) ask you to stop doing the task your doing and do something else instead to help them?
You have to work a set number of hours		Fairly straightforward response
You are paid a regular amount		Fairly straightforward response
You can get overtime or bonuses		Fairly straightforward response

HMRC Guidance on Self-Employed

HMRC state that someone is probably self-employed and shouldn't be paid through PAYE if most of the following are true 

HMRC Guidance		Things to think about
They're in business for themselves, are responsible for the success or failure of their business and can make a loss or profit		For most Paid Carers setting up this is fairly straightforward – it’s the aim of their business
They can decide what work they do and when, where or how they do it.		Do you decide which clients you work for? Do you agree with the clients the times you come and go? Or does the client tell you?
They can hire someone else to do the work		No – only if you’re CQC registered
They're responsible for fixing any unsatisfactory work in their own time		This comes down to the element of risk and who carries that risk the Paid Carer or the client.  So, if you burnt the dinner when cooking for a client would you then charge for the time of remaking it and would you pay for the cost of the ingredients?
They agree a fixed price for their work - it doesn't depend on how long the job takes to finish		What is your agreement with your client, do you charge for the outcome/output (ie helping someone up each morning, which could include any, or all, of the following - showering, dressing and preparing breakfast) regardless of how long this takes.  Or do you charge by the time this takes.
They use their own money to buy business assets, covering running costs, and provide tools and equipment for their work		Do you provide transport to take your clients out or do they? Do you provide your own forms for care plans, policies and procedures etc? Do you provide your own protective equipment? Do you provide your own insurance? Do you ensure that you provide your own training?
They can work for more than one client		Again, a straightforward response (obviously this is clearer if you do work for more than one client, rather than simply saying you can)

 HMRC go on to say that someone is probably self-employed and doesn’t have the rights of an employee if they’re exempt from PAYE (as tested above) and most of the following are also true: 

They put in bids or give quotes to get work		Fairly straightforward response
They’re not under direct supervision when working		Who directs you when working with your client? Does the client specify the work and how you do it or do they specify the outcome?  See above under ‘You are told when, where and how to work’
They submit invoices for the work they’ve done		Fairly straightforward response
They don’t get holiday or sick pay when they’re not working		Fairly straightforward response
They operate under a contract (sometimes known as a ‘contract for services’ or ‘consultancy agreement’) that uses terms like ‘self-employed’, ‘consultant’ or an ‘independent contractor’		This is one of the critical elements taken into account in a court of law when the employment status is challenged.

 In looking at all these elements, and answering honestly, it should become clear whether you are employed or self-employed (for each client).  As stated above HMRC has a tool which takes you through a number of questions and, as long as you answer everything honestly, will give you a result and ‘certificate’ which shows your employment status.