HUMAN RESOURCES & FINANCE

Transcription

1 HUMAN RESOURCES & FINANCE CORPORATE SERVICES EMPLOYMENT RELATIONSHIP GUIDELINES FOR EMPLOYEES, WORKERS AND SELF-EMPLOYED SERVICES

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3 Contents 3 Contents 4 Introduction Definitions of Employment Status 5 Employment Status Summary Employment Groups 6 Contractual Arrangements & Associated Payment Forms Sources of Help and Advice 7 Process for Engagement of Individuals and Organisations for Services 8 Decision Tree for the Engagement and Payment of Self-Employed Services, Workers and Employees 9-13 Appendix B: Examples of typical roles carried out at the University and the employment group they are likely to fall into Summary of the Terms of Engagement for Workers and Terms and Conditions of Employment for Short Term Temporary Staff SS1 Form Payment for Casual Workers (Less than 1 week) SS2 Form Application Form and the Principal Statement of the Terms of Employment for Short Term Temporary Staff ( less than 3 months) SS4 Form Worker Agreement Application form and Terms of Engagement SE1 Form Agreement for the Provision of Services - TEACHING, EXAMINING, ACTORS/MUSICIANS and Patient and Public Participation in RESEARCH/CLINICAL TRIALS SE2 Form Agreement for the Provision of Services -Consultancy 27 Fee Form 1 Payment of Fees for TEACHING, EXAMINING, ACTORS/MUSICIANS and Patient and Public Participation in RESEARCH/CLINICAL TRIALS 28 Fee Form 2 - Payment of Fees for Work Pre-determined by HMRC Employment Status Indicator (ESI) website as SELF-EMPLOYED to be Paid with no Tax and no NI 3

4 Introduction Determining an individual s relationship with the University is complex and is determined by employment law. It is not a matter of choice by the individual, Faculty, School, Service or the University to decide the employment status of an individual, though the intentions of those involved and the terms of contracts drawn up at the outset of a working relationship will be relevant. The decision on which employment group an individual falls into will depend on the relationship between the individual and the University and is determined by a number of legal tests, which will include: Whether there is a contract at all between the University and the individual; Whether the individual is required to provide services personally; The degree of control over the service provided who decides when and how the work is done; and Whether there is a mutuality of obligation on behalf of the University or the individual, i.e. whether work has to be offered and carried out. An individual providing work activities will fall within one of the three employment status groups determined by law. Depending on which employment group they fall into will also determine their employment rights and responsibilities in the workplace, and how the deduction of income tax and National Insurance contributions are calculated. The three employment status groups are: 1. Employee 2. Worker 3. Self-employed The fact that an individual may be deemed to have a particular employment status for tax purposes is NOT necessarily determinative of their employment status for employment rights purposes. The HMRC ESI tool determines status for tax purposes only e.g. someone determined as employee could be a worker or even, in some cases, self-employed for employment rights purposes. Employment Status Definitions Employee An employee is an individual who works for an employer under a contract of employment, which is known as a contract of service. Under a contract of employment, there must be mutuality of obligations between the employer and the employee i.e. the employer is obliged to offer and pay the employee for the work, and the employee is obliged to turn up and undertake the work personally. Employees are entitled to all statutory employment rights and are protected by a whole range of legal provisions, including payment of wages, dismissal, redundancy etc. Self-employed A self-employed individual provides the employer with his or her services, but remains independent. The contract between the individual and the employer is a contract for services. Typically there may be an ability to provide alternative individuals to carry out the work in question. Services may also be provided through a company. Self-employed workers are not entitled to statutory employment rights. For income tax and national insurance purposes, the employment relationship is ultimately determined with specific reference to HMRC regulations. The fact that a person is registered as self-employed does not necessarily mean that the work to be provided on behalf of the University is of a self-employed nature. 4

5 To help determine whether an individual is self-employed, the HMRC Employment Status Indicator (ESI) tool must be completed by the engager before any engagement is entered into with the individual. The ESI can be found at The ESI will advise if the individual is either an employee or self-employed for income tax and national insurance purposes and the individual must be engaged/employed within the appropriate employment group. Occasionally, the ESI tool will indicate undetermined in which case the contact Payroll in order to better understand the working relationship. engager should Workers Workers are a hybrid category that falls between an employee and self-employed. A worker is an individual who works not under a contract of employment but under a contract for services. Workers are however obliged to provide their service personally. There is no obligation for workers to accept and undertake work offered. Similarly, there is no obligation by the employer to offer work. Workers are entitled to some limited employment rights, such as protection under the Working Time Regulations (including holiday) and the minimum wage. Summary of Employment Relationship Determining Factors Employee Self-Employed Worker Employer obliged to offer and pay Can decide how, when and Employer has no obligation to offer the employee for the work where to do the work any work Employee is obliged to turn up and Can hire someone else to do the Worker does not have to accept undertake the work personal ly work at their own expense work offered but once accepted must provide their services personally It is, using old fashioned They risk their own money/are in terminology, a master and servant business on their own account relationship. They work under the control and/or Agree to do the work for an all Whilst at work they are under the supervision of a manager or inclusive fee and usually have to supervision of a manager or supervisor correct unsatisfactory work in supervisor their own time and at their own expense They are more likely to be paid a Provide the main items of They are usually paid on an hourly salary but may be paid on an hourly equipment they need to do the rate or piece rate basis or piece rate basis work NOTE: some individuals may not fall clearly into any of these categories. Some may be deemed to be volunteers or voluntary workers for example, especially if they are unpaid/expenses only. Further information and advice should be obtained from the Faculty/Service HR Manager. Employment Groups at the University of Leeds The University needs to ensure that it applies appropriate rules of engagement for anyone providing work activities on its behalf. This is not only to provide a fair and equitable framework for all its workers but also to ensure that, as a responsible employer, it complies with its legal obligations. Appendix B summarises examples of typical roles carried out at the University and the employment group that they are likely to fall into. These employment groups and descriptions are defined by employment legislation and have also been drawn up with specific reference to HMRC regulations. 5

6 Therefore, engagers must abide by these procedures before any engagement is entered into with an individual and are responsible for ensuring that consideration is given to the employment status at an early stage of the engagement process (rather than when the work has been completed). Faculties/Schools/Services must follow the process shown on page 7 when engaging individuals and should seek advice from the Faculty HR Manager/Officer at the earliest opportunity. Summary Table of Contractual Arrangements & Associated Payment Forms Contractual Form Nature of Engagement Payment Forms SS1 Payment for Casual Workers To pay individuals where the duration of SS1 engagement is one week or less SS2 Application form and the Principal Statement of the Terms & Conditions of Employment for Short Term Temporary Staff SS4 Worker Agreement SE1 Agreement for the Provision of Services Teaching, Examining, Actors and Musicians SE2 Agreement for the Provision of Services e.g. Consultancy TA-EMP 08 Application form and the Principal Statement of the Terms of Employment for Hourly Paid Teaching Staff (other than students) Sources of Help Where an individual is needed for regular support for a period of up to 3 months Where there is a need for on-going flexible/ad hoc support and there is no mutuality of obligation on either side to offer/accept work Where there is a need for an individual to provide specialist services to the University and are self-employed Where there is a need for an individual to provide specialist services to the University and are self-employed Where there is a need to engage specialist individuals on an hourly paid basis to provide teaching Timesheet/Salaried Timesheet Fees Form 1 Fees Form 2 Salaried Faculty & Service HR Managers & Officers Can help to determine employment relationships within Faculties & Services; provide advice and guidance on engaging individuals on a self-employed, worker or employee basis. HR Managers/Officers will co-ordinate contractual arrangements, advise on best practice and train engagers in the use of the HMRC ESI tool. Payroll Office Payroll can provide advice and guidance relating to Income Tax and National Insurance, payment forms, appropriate use of Fees Forms for self-employment and will act as liaison with the HMRC Employment Status team on behalf of the University. 6

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8 Appendix B: Examples of typical roles carried out at the University and the employment group they are likely to fall into. Employees Employment Example Characteristics Contract Type Payment Responsibility Notes Deduction of Tax Group Roles Method for SAP etc & NI Open ended Lecturers, Standard University employment. This Full Monthly HR Tax - Yes administrators should be the most frequently used form of employment payroll NI - Yes etc University employment contract issued by central HR Open ended- Research staff These appointments are used where the Full Monthly HR University has an Tax - Yes fixed funding individual has had more than one successive fixed-term contract at the employment contract issued payroll obligation to consult NI - Yes with the individual University and has been continuously employed for a period of four years or more, yet the funding supporting their appointment remains fixed term by central HR and through ESRG on the expiry of funding Fixed- term Research staff, May only be justified in law when used to maternity leave achieve a legitimate business objective. It cover etc should be noted that staff who have had more than one successive fixed-term contract at the University and have four years continuous service will be offered open ended contracts, unless it can be objectively justified in accordance with the University s Policy on the use of Fixed- Term Contracts available at PGld=4 for the post to remain fixed term Full employment contract issued by central HR Monthly payroll HR University has an obligation to consult with the individual and through ESRG on the expiry of appointment Tax - Yes NI - Yes 8

9 Employment Group Example Roles Short term Clerical temporary assistance Technical staff 1 assistance Research assistance etc Characteristics Engaged where it is necessary to fill a short term vacancy, or to cover peak worklo ad periods, and due to the nature of the role a regular work pattern is required Contract Type Payment Method Form SS2 Can be completed by paid by Faculties/ Schoo either ls/services timesheet or salaried through the monthly payroll Responsibility for SAP etc HR Notes Arrangements apply to all staff groups Maximum duration of these appointments is 3 months University is not obliged to consult with individuals on the expiry of the fixed term contract Deduction of Tax & NI Tax - Yes NI - Yes Lecturers Teaching Assistants Instructors Tutors Hourly paid teach ing staff Normally employed to teach specialist modules or to cover the teaching of academic staff Hourly paid Where the individual is not self employed e.g. coaches and they are obliged to work when or mentors required, there is a mutual obligation etc Form TA EMP08 completed by Faculties/ Schools/ Services Form SS2 completed by Faculties/ Schools/ Services Paid in monthly equal instalment during the teaching periods Can be paid by either timesheet or salaried through the University payroll HR HR Where appropriate appointed to annual contracts, although they normally only work during teaching periods. Maximum duration of these appointments is 3 months University is not obliged to consult with individuals on the expiry of the fixed term contract Tax - Yes NI - Yes Tax - Yes NI - Yes 1 Before engaging individuals through these arrangements, Faculties, Schools and Services may wish to consider using the services of Joblink, administered through Leeds University Union. Further information is available at 9

10 Self Employed Example Roles HMRC regulations Contract Type Payment Method Responsibility for SAP etc Consultants Individual normally engaged on an SE2 - Consultancy Invoices are submitted to the Payroll independent consultancy basis through Agreement University for payment at Contractors a company agreed intervals Payment to individual is made Purchasing The agreed fee payable to the on completio n of Fees Form 2 Office consultant will be based on an all inclusive rate to include fees and associated expenses by Faculties/ Schools/Services. Payments to companies are made via Purchasing Notes* Deduction of tax and NIC Tax - No NI - No Actors and Musicians Examiners Moderators An ESI must be completed to determine self employed status Paid by performance or by time ESI not required Tax treatment varies depending on the examination level and the contract period. Question Setters Contracts over 12 months for undergraduate level examiners are taxed at source as employees so may be unattractive. ESI not required SE1 -Agreement for provision of TEAM Form Fees 1 completed by Faculties/Schools/Services SE1 -Agreement Fees Form 1 completed by for provision of Faculties/Schools/S ervices TEAM Public Lectures An ESI must be completed to determine SE1 -Agreement Fees Form 1 completed by self employed status for provision of Faculties/Schools/S ervices TEAM Lecturers An ESI must be completed to determine SE1Agreement for Fees Form 1 completed by self employed status. provision of TEAM Faculties/Schools/Services Instructors Tutors/ teachers Tax treatment will depend on frequency and type of service provided ESI must be completed Payroll Paid by time = Tax - No NI - Yes Paid by performance Tax - No NI - No Payroll Postgraduat Tax - No e level NI - No Undergradu Tax Yes ate level NI - No over a period of 12 months or less Undergradu Tax - Yes ate level NI - Yes over a period of 12 months or more Payroll Tax No NI - No Payroll 3 days or less in 3 consecutive months More than 3 days in 3 consecutive months Tax - No NI - No Tax - No NI - Yes 10

11 Workers Example Roles Characteristics Contract Type Payment Method Responsibility for SAP etc Notes Open day Engaged to Form SS1 Payment either by Payroll HMRC regulations note that the duration assistants 1 complete a one off completed by cash through the of engagement must be less than one piece of work Faculties/Schools/ University s Cash week (Monday Sunday); must be the Services Office or monthly only employment or engagement in the payroll current tax year and payment amount must be under the National Insurance Contribution Threshold for payment in cash HR HMRC regulations note that the duration of engagement must be less than one week (Monday Sunday); must be the only employment or engagement in the current tax year Engaged on an Form SS4 Monthly payroll HR These contracts should not be used for Reception cover 1 irregular or flexible completed by regular ongoing work where both parties basis Faculties/Schools/ require/expect work. Filing 1 Services Where such a work pattern does develop Student Hosts 1 consider moving the worker to another etc employment group. Deduction of Tax & NI Cash Office Tax - No NI - No Monthly payroll Tax - Yes NI - Yes Tax - Yes NI - Yes University is not obliged to consult with individuals on the expiry of the work. 1 Before engaging an individual through this arrangement, Schools and Services may wish to consider using the service of Joblink, administered though Leeds University Union. Further information is available at 11

12 Non Employment Groups Example Roles Characteristics Contract Type Payment Method Notes Agency Workers Agency workers are not employees of the University and are paid by the Agency direct. Their terms and condition of employment are also determined by the Agency Normally engaged to cover short term vacancies, although there is no limit on the Agreement made between Faculty/School/Service and the Agency Paid as a vendor via Purchasing From October 2011 new regulations come into force which provide agency workers who have been engaged with the same hirer for a period of 12 weeks or more with the same employment rights as University employees in terms of basic pay and holiday entitlements duration of the engagement of agency workers. However, it is not economically viable to maintain such an arrangement for long periods. Therefore, consideration should be given to making an appointment to another appropriate employment group, paid through the University Volunteers/ Usually paid expen ses/costs only, may be As req uired e.g. letter Expenses via Fees Note that NMW may apply in some voluntary workers provided with accommodation or subsistence (Research, Lay, Clinical Trials Participants) Form 1 circumstances and payments in excess of expenses may move away from this status 12

13 Appendix C SUMMARY OF THE TERMS OF ENGAGEMENT FOR WORKERS AND TERMS AND CONDITIONS OF EMPLOYMENT FOR SHORT TERM TEMPORARY STAFF - These arrangements are applicable to all groups of staff TERMS OF ENGAGEMENT WORKERS EMPLOYEES CASUAL WORKER SHORT TERM TEMPORARY STAFF Need to complete a one off task and where the duration of the assignment is one week or less Need for on-going flexible/ad hoc support Need for regular support for a period of up to 3 months Contract for Services Contract for Services Contract of Services Advertising Advertising not necessary Vacancies may be advertised locally within Faculties, Schools, Services Vacancies may be advertised locally within Faculties, Schools, Services Authorisation Pre Yes Yes Yes requirement Duration One week or less No limit to the duration that these contracts More than one week, but less than 3 can be used months. Any extension beyond 3 months must be based on a standard University fixed-term/open ended employment contract. Contracts Form SS1 issued by Facultie s, Schools, Form SS4 issued by Faculties, Schools, Form SS2 issued by Faculties, Services Services Schools, Services References Employment references not required Yes - Faculties, Schools, Services will be responsible for obtaining employment Yes - Faculties, Schools, Services will be responsible for obtaining references for shortlisted candidates. employment references for shortlisted candidates. Status No employment relationship No employment relationship Employment relationship Equal Pay Subject to equal pay for work of equal value Subject to equal pay for work of equal value Subject to equal pay for work of legislation legislation equal value legislation Holiday Pay No entitlement Entitled to 28 days (pro rata) statutory Entitled to University holiday pay holiday under the WTR calculated on the basis of days (pro-rata) Worker can exercise their right to paid holiday by request in writing to the Head of School/Service. Alternatively, holiday pay Payment for holiday to be made on may be paid on a pro-rata basis at the end the expiry of appointment, or on of the engagement. request at the time of taking holiday the first year of the engagement, worker may only take as much holiday as has been accrued at the relevant time. 13

14 TERMS OF WORKERS EMPLOYEES ENGAGEMENT CASUAL WORKER SHORT TERM TEMPORARY Immigration Checks STAFF No Yes - Faculties, Schools, Services will be responsible for carrying out document checks to confirm that individuals have the right to work in the UK. Yes - Faculties, Schools, Services will be responsible for carrying out document checks to confirm that individuals have the right to work in the UK Where the duration of the engagement is more than 12 months, HR will be responsible for carrying out annual document checks for individuals who do not have permanent leave to remain in the UK. Increments No No No Interviews No Yes at local level in line with the University s recruitment and selection policy Yes at local level in line with the University s recruitment and selection policy Job Descriptions required No Not required, but may be good practice Yes National Minimum Wage To be paid National Minimum Wage To be paid National Minimum Wage To be paid National Minimum Wage Objective justification for No No Yes the post being fixed-term Obligation by the individual N/A No Yes to accept work Obligation by the University N/A No Yes to offer work Payment Method One off payment Zero hours only, paid by timesheet Timesheet/annual salary Pension Scheme Not eligible Not eligible Optional Period of Notice N/A Arrangement can be terminated at any time by either the Individual or the University by giving one months notice in writing. One month Standard of performance if the standard of performance is deemed unacceptable by the University, the agre ement can be terminated without notice. Probation N/A No Optional Protection in the workplace Discrimination Health & Safety Whistleblowing Equal Pay National Minimum Wage Discrimination Health & Safety Whistleblowing Equal Pay National Minimum Wage Full employment protection 14

15 TERMS OF ENGAGEMENT Purpose of Appointment WORKERS CASUALS WORKERS To carry out one off tasks To provide flexible and ad hoc support EMPLOYEES Need for regular work pattern that is essential to the day to day running of the Faculty, School, Service Paid at a pay scales Rates of Pay Must meet National Minimum Wage Paid at an appropriate rate on UOL pay n appropriate rate on UOL scales Redeployment N/A N/A N/A Redundancy Pay N/A No entitlement No entitlement Requirement to consult through ESRG on the expiry of appointment/funding N/A No requirement - not employees No requirement as the employment is 3 months or less. If the contract is extended beyond 3 months there will be a requirement under our policy to consult on the expiry of appointment. Requirement to individual consultation on the expiry of appointment/funding N/A No requirement not employees No requirement as employment is 3 months or less. If the contract is extended beyond 3 months there will be a requirement under our policy to consult on the expiry of appointment. Sick Pay N/A No entitlement to University sick pay No entitlement to University sick pay, possibly eligible for SSP but may be eligible to SSP depending on level of NI contributions paid Statutory Payments e. g. SMP/SAP/SPP N/A Statutory Payments if eligible Statutory Payments if eligible 15

16 Appendix D Payment Forms 16

17 SS1 Form Payment for Casual Workers (less than 1 week) 17

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