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HMRC internal manual

Employment Status Manual

HM Revenue & Customs
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Particular occupations: subcontractors in the construction industry - status - long-term engagements

In the construction industry, at one end of the spectrum you may have a general labourer who works full-time (or near full-time) for a single contractor on a long-term basis. The following features are often present:

  • payment is by the hour/day/week/month
  • the worker is subject to extensive control over what, when, where and how he does the work
  • personal service is required
  • apart from small tools, the engager supplies the materials and equipment.

In such circumstances, the worker is likely to be an employee. Similar considerations will apply for part-time workers.

Workers engaged and paid to undertake a particular task (for example, bricklaying) may also be employed. In these circumstances, there may be an ’opportunity to profit from sound management’ (if the work is done quickly other work can be undertaken resulting in more remuneration). This method of payment in itself is not however conclusive evidence of self-employment (for example, many employees are paid ’by the piece’ - see ESM0542).

However, at the other extreme, where an engagement (and payment) is:

  • ’task-based’ and
  • involves a worker who undertakes and is responsible for completing a specific parcel of work and
  • provides significant equipment and/or materials and/or
  • faces real financial risk,

then these factors will be strong pointers towards self-employment (for example, the plumber who supplies pipe work, is paid for a specific piece of work, and is responsible for rectifying any defective work at his own cost will almost certainly be self-employed). See ESM0541.

Engagement ’by the task’ should not be confused with engagement ’for the duration of a project’ where the engagement finishes when the project is completed. If payment is by the hour/day/week and the other circumstances outlined in the bulleted list at the top of this page are present, the worker is equally likely to be an employee (but one engaged under a contract of indeterminate length).

It is important to bear in mind, though, that employment status in the construction industry is determined on the basis of the case law test as in any other occupation where there are no categorisation rules. Guidance on the application of the test is given at ESM0500 onwards. It is important to obtain the full facts and build up an overall picture before forming an opinion about the employment status of the working relationship.