Employment Status Determination Policy

Purpose

The purpose of this policy is to establish a clear, robust, and compliant framework for determining the employment status of all individuals engaged through People Group Services Ltd (“PGS”), including those operating under:

• PAYE employment
• Joint Employment arrangements
• Agency supply chains
• Off-payroll working arrangements (IR35)

This policy ensures compliance with:

• Income Tax (Earnings and Pensions) Act 2003
• Finance Act 2025
• HM Revenue & Customs guidance
• Relevant case law on employment status

Scope

This policy applies to:

• All workers, contractors, and employees engaged via PGS
• All agencies and Managed Service Providers (MSPs) within the supply chain
• End clients receiving services from workers engaged through PGS

Policy Statement

PGS is committed to:

• Ensuring all workers are correctly classified for tax and employment purposes
• Applying consistent, transparent, and auditable status determinations
• Preventing tax avoidance, disguised remuneration, or misclassification
• Supporting agencies and clients in mitigating risk under Joint and Several Liability (JSL)

Where appropriate, PGS will default to employed (PAYE) engagement models to ensure compliance and reduce risk across the supply chain.

Key Principles of Status Determination

Employment status is determined based on established legal principles, including:

Control

• The degree to which the engager controls how, when, and where work is performed

Mutuality of Obligation (MOO)

• Whether there is an obligation to provide and accept work

Right of Substitution

• Whether the worker can provide a substitute to perform the work

Financial Risk

• Whether the worker bears financial risk or operates as a business

Integration

• The extent to which the worker is part of the organisation

Provision of Equipment

• Whether tools and equipment are provided by the engager

Determination Process

PGS operates a structured and auditable determination process:

Step 1: Data Collection

• Engagement details collected from:
  • Agency
  • End client
  • Worker

Step 2: Role Assessment

• Review of:
  • Contractual terms
  • Actual working practices
  • Assignment details

Step 3: Status Evaluation

• Assessment conducted using:
  • Internal compliance frameworks
  • HMRC guidance and tools (e.g. CEST where applicable)
  • Case law principles

Step 4: Determination Outcome

• Classification issued as:
  • Employed (PAYE)
  • Worker (employment rights model)
  • Self-employed (only where fully justified)

Step 5: Documentation

• Determination recorded and retained within the PGS system
• Supporting evidence stored for audit purposes

Status Determination Statement (SDS)

Where applicable (e.g. under off-payroll working rules):

• A Status Determination Statement (SDS) will be issued
• The SDS will:
  • State the employment status
  • Provide reasons for the determination
  • Be shared with relevant parties in the supply chain

Dispute Resolution Process

PGS operates a transparent disagreement process:

• Workers or agencies may challenge a determination
• Challenges must be submitted in writing
• PGS will:
  • Review all relevant evidence
  • Respond within a reasonable timeframe (typically 45 days)
  • Issue a revised or upheld determination

Joint and Several Liability (JSL) Considerations

Under the Finance Act 2025:

• Liability for unpaid PAYE and NICs may transfer up the supply chain
• Incorrect status determinations increase financial exposure

PGS mitigates this risk by:

• Prioritising PAYE and compliant engagement models
• Ensuring real-time verification of payroll accuracy
• Maintaining full audit trails and transparency

Record Keeping and Audit

PGS will maintain:

• Full records of all status determinations
• Copies of SDS documents
• Evidence supporting each decision
• Audit logs within the PGS portal

All records will be retained in accordance with HMRC requirements and internal data retention policies.

Roles and Responsibilities

People Group Services Ltd

• Conduct status determinations
• Maintain compliance systems and audit trails
• Provide transparency via the PGS portal

Agencies / MSPs

• Provide accurate assignment data
• Cooperate with determination processes
• Ensure downstream compliance

End Clients

• Provide accurate working practice information
• Support SDS processes where required

Workers

• Provide truthful and complete information
• Notify PGS of any changes in working practices

Technology and Transparency

PGS supports its determination process through:

• Digital onboarding systems
• Real-time payroll validation tools
• HMRC-aligned calculation verification
• Full visibility of payslips, KIDs, and RTI data

This ensures determinations are:

• Evidence-based
• Transparent
• Defensible under audit

Training and Awareness

PGS will ensure:

• Internal staff are trained on employment status legislation
• Agencies and clients are supported with guidance
• Regular updates are issued in line with legislative changes

Policy Review

This policy will be reviewed:

• Annually; or
• Following significant legislative or regulatory changes

Compliance Statement

People Group Services Ltd operates a “Compliance Without Compromise” approach to employment status determination.

We prioritise:

• Accuracy
• Transparency
• Legal defensibility

to protect all parties within the labour supply chain.

Contact

For queries relating to employment status determinations, please contact:

compliance@peoplegroupservices.com

Compliance Team
People Group Services Ltd