Disguised Employment is simply where a worker carries out work for a client in a manner similar to that of an employee, whilst operating through an intermediary, for example a personal service company.
WHAT DETERMINES A DISGUISED EMPLOYEE
There are a number of tests which determines whether a contractor/worker is in fact a disguised employee and not in business on their own account.
A contractor will typically :
- Have a right of Substitution
- Can demonstrate automatically in how the work is carried out.
- Can demonstrate they are under no obligation to accept work or that the engager has an obligation to offer work
- Opportunity to profit from sound management of task
- Bear financial risk
- Provides own equipment
An employee will typically:
- Be subject to the control of the engager in the way and manner in which they work
- Be under a obligation to provide personal service
- Have a Mutuality of Obligation in so far as the engager is obliged to pay a wage and the worker is obliged to provide his/her own work
- Not bear any financial risk