IAgSA Annual Conference Employment and Service Agreements 4 March 2017

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.

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

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

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

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

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

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

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

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)

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

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

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

Close & Questions

Contact us Alan Dark Legal Director T: 0121 631 5337 M: 07885 989 002 E: alan.dark@shma.co.uk