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HMRC internal manual

Employment Status Manual

Salaried Member: Disguised Salary: Piecework

ITTOIA/S863B (3)

A Disguised Salary comprises fixed amounts and amounts that are determined without reference to, or are not in practice affected by, the overall level of profits or losses for the LLP as a whole.

If a member is paid on a “piece work” basis, that is, on the basis of the number of tasks they perform or pieces of work they do, then this does not vary with the overall profits, the reward is Disguised Salary and Condition A is satisfied.

A payment by reference to the number of tasks performed or by reference to turnover is variable but it is:

“varied without reference to the overall amount of the profits or losses of the limited liability partnership”



This example shows the distinction between rewards based on personal efforts, the amount of work done by that member, as opposed to the profits of the business.

W LLP operates sites offering “hand car washes”. The individuals who wash the cars are members of the LLP rather than being given contracts of employment. Member D washes cars at one of these sites. Member D is paid on a piece work basis; the more cars washed, the more he receives.

Member D will earn more if more cars come to be washed. However his income is based on his work, not the success of the business as a whole. Member D receives a Disguised Salary and Condition A is satisfied.

This principle applies whatever the nature of the work.