ESM2014 - Agency workers: contracts between an agency and a company

The agency legislation does not apply where the contract for the supply of services is between the agency and a company rather than between the agency and the worker (see ESM2004). A worker may form a 'one-man' service company and offer services via that company. The legislation will not apply to the contract between the agency and the service company in these circumstances provided the contract with the agency for the worker's services is genuinely made by the service company. The legislation is not avoided simply by including the company's name on a contract obviously meant for use by an individual or by arranging for payment to be made to the company.

Where work is genuinely undertaken via a service company, the individual worker will normally be chargeable under Schedule E/on employment income, and liable for Class 1 NICs, on the remuneration from his or her office as a director or employee of that company.

Where it is claimed that services are provided to the company in a self-employed capacity, see ESM2011.

From 6 April 2000, the new ‘intermediaries’ legislation may also apply (see ESM3000 onwards).