Q&As

Could a personal service company structure be regarded as a sham, such that the individual is, for the purposes of employment law rights, an employee of the engager?

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Published on LexisPSL on 15/08/2019

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • Could a personal service company structure be regarded as a sham, such that the individual is, for the purposes of employment law rights, an employee of the engager?

Could a personal service company structure be regarded as a sham, such that the individual is, for the purposes of employment law rights, an employee of the engager?

You may wish to consider the employment status of an individual supplying services through a personal service company (PSC) separately, depending on whether determining status is for the purposes of employment rights, and for tax purposes.

Although HMRC takes a similar approach to the employment tribunals in determining employment status, they may well reach different conclusions on the same facts. The fact that an individual is regarded as self-employed for tax purposes does not mean that they will not be regarded as an employee for unfair dismissal or redundancy purposes. For further information, see Practice Note: Employee status—Employee status for tax purposes.

There are two ways in which the individual may establish employment rights against the client company:

  1. in the absence of any express agreement between them, by proving to the court that there is an implied contract between the client company and the individual

  2. by

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