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HMRC internal manual

Employment Status Manual

Guide to determining status: oral contracts

  • A valid oral contract between an engager and a worker is no less legally binding than a written contract. It is important to establish the true terms of an oral contract.
  • The difference is that, in a disputed case, it is ultimately for the Tribunal to determine the true contractual terms. Where an oral contract is involved the determination of status becomes one of fact. Even if a Court does not agree with a Tribunal’s decision it cannot overturn that decision unless it was one with which no reasonable Tribunal could come up with.
  • It is essential to establish all of the facts relating to an oral contract by interviewing the parties to the contract and reviewing any relevant documentation. This might include relevant correspondence, invoices etc. You should keep comprehensive notes of interview including the original contemporaneous notes in case you need to give evidence before the Tribunal.
  • There is not the added problem of overcoming a written contract - although it may still be necessary to use similar techniques if you need to dispute what both parties say were the orally agreed terms.