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Definition Of An Employee

Definition Of An Employee
Alison Clynes
Written by
Monday, 23 November 2009 10:00

The question of whether or not someone is an employee is of vital importance where Pay As You Earn is concerned. After all, if you do not actually employ people, you have no need to operate PAYE or pay employer tax and National Insurance contributions.

There is legislation which covers this but the law is not absolutely clear. H M Customs and Revenue have therefore published their interpretation of the law. It has to be said that many accountants feel that the Revenue's guidance is unfairly biased towards their perceived aim of making as many people as possible subject to the PAYE system. Certainly it is in the government's interest to make PAYE as widespread as possible as it not only means that more tax is paid but that it is paid quicker.

One of the things which the Revenue focuses on in its guidance is the difference between a contract of service, which is employment, and a contract for services which they consider to be self-employment. One of the most important things to bear in mind about contracts is that they do not have to be written. They can be verbal or even just implied. Many employers think that they can give the people who work for them a contract which says that those people are responsible for their own tax as a self-employed person. These contracts are worthless.

We at Dataplan Payroll are experts in providing payroll outsourcing. Businesses everywhere have discovered that payroll outsourcing means they don't have to wade through subjects like the above, but can instead simply let experts get on with the payroll outsourcing.

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