There will be occasions when Church/Circuit/District other employing body may need to engage the services of self-employed individuals as consultants. This could include work done on a very short-term or one-off basis or could involve a more long term project.
Independent consultants are often hired to bring in specialised expertise with the intention that the relationship will be short-term and focused on providing services that existing employees are unable to provide.
Furthermore, consultants are usually engaged using consultancy agreements or contracts, which outline the services they will provide, the manner and means for providing these services, and the expected results.
Consultants are bound by the terms of their consultancy agreement or contract, not by the employer's policies, employee handbook or employment-at-will doctrine.
While Employment Contracts or Statement of the Terms and Conditions of Employment concern hiring employees, Consultancy Agreements particularly deal with services of an independent Consultant to fulfil periodic or temporary requirements of the organisation.
Employment vs Self- employment
Employment Contracts are used to hire employees. The express terms must comply with any minimum legal standards such as the right to paid holidays and the right to daily and weekly rest breaks. The essential elements of the written statement of particulars of employment are set out in UK law. For further details please go to Employment Contracts section.
Consultancy Agreements, on the other hand, are contracts for services given by an independent contractor (a self-employed individual) for the provision of consultancy services.
A Consultancy Agreement is limited to a specific project or time period. It is intended for use by organisations (clients) when they are engaging a consultant to provide professional services and where the engagement will not be deemed employment. Consultants provide services for a fee but are not considered to be employees as they don’t have an employer and provide services to a business on a self-employed basis.
For detailed Guidance on Hiring Self-employed Consultants please go the Downloadable Templates Section.
The law treats employees and self-employed contractors differently
The fact that the person is an independent consultant and not an employee has several implications:
- the payment to a consultant is made on the production of invoices and not through payroll. There is no predetermined wage or salary but a negotiated rate for services provided;
- the consultant is responsible for paying their own tax and national insurance contributions;
- the hiring organisation does not have as many obligations towards the consultant as it does to its employees.
Delineating the role of a consultant from that of an employee is important, for purposes of managing tax, national insurance and to avoid potential troublesome Employment Tribunal claims (e.g. relating to unfair dismissal, sick leave etc).
Establishing the correct status
It is not sufficient to simply state that the agreement is a consultancy agreement and that the consultant is self-employed and not an employee.
Determining status is not a mechanical exercise of running through items on a checklist. There is lots of case law covering lots of grey areas covering many slightly different circumstances. A picture has to be painted from the accumulation of detail and not all details are of equal weight or importance to all situations.
When determining employment status courts will look behind contractual terms to establish the true nature of the relationship between the parties and will determine the appropriate category by examining a number of factors including, but not limited to:
- who controls the work and the work product;
- whether the hired party must provide progress reports;
- the duration of the relationship between the parties;
The link to HMRC employment status guidelines for employed or self employed is available from the Government website:
https://www.gov.uk/government/collections/employed-or-self-employed
How to avoid consultants from becoming employees
- allow the consultant to maintain a sufficient amount of control over their working conditions (when they work, how and at what times);
- avoid using the same consultant for an indefinite period without breaks. Use consultants for specific projects and do not prohibit the consultant from working for others;
- allow consultants to use their own equipment and do not integrate them into the workplace (no company email address for example);
- regularly review the arrangements between the parties in order to ascertain whether your consultant is still a consultant or whether they are actually an employee and should be treated as such.
For further information please visit:
https://www.gov.uk/employment-status/selfemployed-contractor