Guidance on completing the Employment Status Questionnaire (ESQ)
Common questions ESQ1 & ESQ2
The employment status questions are critical to determining if the University has an employment type relationship with a worker.
Please give as full a description as possible of the duties to be carried out by the worker under this engagement at each of the questions.
If you have a written role description, such as an advert for the role, please send that with the completed questionnaire.
Section1 - Q1.7 Confirm the worker is providing services through an Agency / Management Service or Umbrella Company
The purpose of ESQ2 is to assess the relationship with the worker under the proposed engagement where there is also an intermediary involved in the payments to be made to the worker. Agencies are the most common type of intermediary.
If you have identified a role and engage an Agent to act as a recruitment agent, to find a suitable candidate to fill the role you have advertised or identified as an employee or casual worker role, the agent is not acting as an intermediary in this instance. You do not have to complete ESQ2 (or ESQ1) because the status is already determined as an employed role and there is no off payroll working.
Employment Agent / Agent providing workers
Where the engagement is with an employment agent (one that employs a bank of workers, provides their services to the University or an agent that provides workers with specific skills), the University pays the agent a fee and the agent will pay the workers, the University has a legal obligation to:
- Determine the worker's employment status, before the engagement starts; and
- Inform the worker and the agent of this status; and
- If this is an employment type relationship, the University must ensure that the agent makes appropriate tax and NI deductions when it pays the workers.
In the latter cases, the University will pass the obligation to deduct tax and NICs to the agent under the terms of the contract for services.
In most cases where departments use agents in this way, the decision that the worker would be an employee / casual worker if engaged directly by the University is clear because we are using an employment or staffing agency to fill staff resource gaps. The University has agreements with its agents to manage the tax and NIC obligations under IR35 rules and we will be able to support departments to manage the engagements efficiently through the Off Payroll Working rules.
An umbrella company (or PAYE umbrella) is a company that self-employed contractors operate from, rather than setting up a PSC. The contractors are employees of the umbrella, that acts as an intermediary between the worker and the University as the client. It is similar to an employment agency in that it deducts PAYE and NI when it pays the workers.
The University’s obligations under Off Payroll Working / IR35 rules are the same as for other agents above.
It is therefore important to provide full details at Question 1.7 of the agency and to describe how the engagement is expected to work between the University, the worker and the agent in practice.
Section 2 Q2.1 Is the Engagement of work through a limited company, partnership or unincorporated body?
The most common intermediary, other than agents providing workers, is likely to be a Personal Service Company (PSC). To decide if the company providing the worker is a PSC and whether the IR35 rules must be considered, please provide full details of the limited company at this question; it will help the central team review the company.