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APPENDIX A
TENDRING DISTRICT COUNCIL
EXTERNALLY FUNDED POST PROTOCOL AND SELF-EMPLOYED CRITERIA
Over the years the Council has been involved in a number of partnership initiatives and situations where funding for additional posts comes directly to the Council. This has enabled additional staffing resources to be employed either on temporary or fixed term contracts.
The purpose of this Protocol is to provide clear advice and guidance to Heads of Department and others on the criteria applicable, before any commitment is made to engage a grant funded post and also to give greater clarity on self-employment which sometimes causes difficulties.
There are a number of issues which emerge from externally funded posts. If the funding is coming directly to the Council from an external source and the employee is working entirely on Council work, then it is more straightforward for the Council to become the employer. In the following two scenarios, however, it is a more complex issue and we should avoid taking on an employee in respect of (a) below and should never engage an employee in respect of (b) below.
(a) Where the post holder is employed on partnership projects
(b) Where a third party is the lead organisation and the Council employs the staff and then allows them to work on the third party project. In addition to the employer responsibilities set out below, the Council will have a statutory obligation to charge 20% VAT on top of salary, National Insurance and Superannuation costs and bear all of the employer risks without having management responsibility.
It is essential therefore when considering grant funded posts that there is understanding of what being the employer means. The employee engaged will have employment protection in the same way as any other Council employee including
The legislation in respect of fixed term contracts is clear – the engagement cannot go beyond 4 years otherwise the employee will be deemed to have accrued permanent employment rights. (There is a tendency for these types of contract to be initially for 12 months and then get extended for further periods as funding becomes available).
The grant funding must cover the following costs:-
Before agreement is given to host a grant funded post a report setting out the full implications must be submitted to the Management Team. The service seeking the grant funded post must provide all of the relevant information in good time to the Head of Resource Management and Human Resources Manager and the report must be a joint report between the Managers. Where the original contract period is longer than 12 months or is extended beyond 1 year, the employee will accrue permanent employee status and approval sought from the Workforce Panel to add what is in effect a permanent post to the establishment, albeit for a fixed term. Where a fixed term contract is extended beyond 12 months, the approval process set out above must be repeated. If prior approval to an extension has not been received 4 weeks before the expiry of the contract, Human Resources will give notice to terminate the contract – this is to avoid a situation where a contract over-runs without approval. It is therefore essential that the approval process is commenced in good time.
THIS DOES NOT APPLY TO THE ENGAGEMENT OF ESTABLISHED COMPANIES THAT HAVE MULTIPLE CLIENTS, PRODUCE ANNUAL ACCOUNTS FOR THE INLAND REVENUE AND WHICH MAY OR MAY NOT BE VAT REGISTERED.
The area of Employed v Self-Employed is very much a grey area and one, which has caused difficulty in the past. Currently the Inland Revenue puts the onus on the “engager” to decide how to make the payment and then, if they deem that the wrong decision was made, then the “engager” becomes liable for any uncollected tax or National Insurance.
The three main areas to consider are the terms of engagement, the resultant Insurance Liability and the question of re-employment i.e. those who have left and are in receipt of pension.
The first issue is whether the contract between the parties is one “of service” i.e. employed or “for services” (self employed). There are certain factors that help to determine this.
Control – where the “engager” has no right of control over the worker then the contract is not one “of service.” The extent of this control will vary from employer to employer and can be exerted in different ways – e.g.
Financial risk – individuals who risk their own money by, for example paying for overheads and materials, buying assets, bearing their own running costs are almost certainly self-employed.
Mutuality of obligation – for there to be a contract of service there must be an irreducible mutuality of obligation comprising of
Personal Services – for there to be a contract of service, the worker must be required to carry out at least some of the work personally. If the worker is free to hire someone else it is most unlikely that the individual is an employee.
Provision of equipment – if the worker provides any necessary equipment that is fundamental to the work and he/she is probably self-employed. If, however, the worker carries out the work in the engager`s offices using the engagers desk, equipment etc., then this points to employment.
Basis of payment – employees are usually paid monthly and work a set number of hours. If they work additional hours they can claim additional payments. Someone who is self-employed usually agrees a rate for the job, if it takes longer to complete then they still get the agreed payment.
Insurance – employees of Tendring District Council are covered by the various insurance policies in place – Public Liability, Officials Indemnity etc). Any self-employed person providing professional services for or on behalf of the Council MUST provide adequate Professional Indemnity insurance cover. This is particularly relevant in the case of planning, architectural or building type services where, in addition, a “roll-on” cover should be demanded to cover a period aft the term of engagement has ceased. Proof of paid premiums MUST be sought by the “engager”. Any query regarding adequacy or other aspect of any necessary insurance cover should be referred to the Council`s Insurance Officer for advice. Any individual involved in tasks for, around or involving the public MUST ALSO PROVIDE third party liability insurance cover to a minimum of £5M, preferably £10M. Again proof of paid premiums MUST be sought by the “engager”.
Re-employed Pensioners - the Superannuation Scheme (LGPS) has strict rules regarding earnings limits of former employees who are in receipt of pension from the LGPS. If total earnings (pension plus payments for work) exceed the employee`s former salary there is a £ for £ reduction in pension payable. The Council has a duty and responsibility to inform Essex County Council, as administrators of the LGPS of such circumstances.
CS/06/07/HRCS