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Engaging Contractors: Employee or Contractor?

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It all depends on the status of the engagement. The IR35 framework is designed to highlight so-called “disguised employment”, which is where a company engages workers on a self-employed basis via a Personal Services Company (PSC), rather than on an employment contract, so they become disguised employees. From April 2021, medium and large companies that engage individuals who work through an intermediary or Personal Services Company (PSC) will be responsible for determining the IR35 status of their workers, rather than allowing the workers to define this themselves.

Employee vs. Contractor: The 3 Main Principles

The three main principles to influence IR35 status include the following:

Supervision, Direction, and Control: What degree of supervision, direction and control do you have over what, how, when and where the worker completes day to day work?

Substitution: Can the worker send someone else to carry out the work?

Mutuality of obligation: Are you obliged to offer work to the worker and are they obliged to accept?


Potential rules around “relevant engagements”