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HMRC internal manual

Employment Status Manual

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HM Revenue & Customs
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Agency and temporary workers: overarching contracts of employment - providing an opinion on the contract

Providing an opinion on the contract

Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 (See ESM7030) is the leading authority in providing the criteria for determining whether a contract of employment exists.

More detailed guidance in relation to considering contracts can be found at ESM0506 onwards.

Where you are asked to provide an opinion as to whether HMRC considers that a contract is an overarching contract of employment as part of dealing with a persons tax affairs, you should in the first instance review and consider the written terms of the contract provided. It should be made clear however that HMRC is not providing an employment law advisory service.

Where you are satisfied that the conditions as set out by MacKenna J in Ready Mixed Concrete are met then the contract will be a contract of employment. Where you are further satisfied that the contract provides mutual obligations on the part of both the engager and the worker in the gaps between assignments then the contract will likely be an overarching contract of employment too.

Where you are satisfied the contract is an overarching contract of employment you should:

  • provide a written opinion to the effect that taken in its entirety the contract would create an overarching contract of employment;
  • provide a clear explanation setting out the reasons for your opinion, with reference to the contractual clauses and/or any other information you have been provided with;
  • provide a clear caveat that your opinion is given on the basis that the contractual provisions fully reflect what happens in practice;
  • advise the employer that HMRC reserves the right to check that the contractual provisions reflect what happens in practice.

Where you are not satisfied that the contract is an overarching contract of employment, you should:

  • provide a written opinion clearly setting out the reasons why you are not satisfied the contract does not constitute an overarching contract of employment;
  • advise that even though your opinion is that the contract is not an overarching contract of employment, it is likely that each individual assignment will be a separate contract of employment and that each assignment is likely to be a permanent workplace.
  • carefully consider any dispensation application on the basis of guidance provided in the Employment Income Manual at EIM30050 onwards and the Compliance Operational Guidance (COG) Manual at COG907080 onwards.