In Simply Learning Tutor Agency & Others v BEIS [2020] EWHC 2461, the High Court found that online tutor introduction agencies are employment agencies although they only supply self-employed tutors.

  • The agencies run online platforms introducing private tutors to clients in return for an introductory fee.
  • The client, normally a parent, enters a contract for services with the tutor however they pay money into a client account held by the agency, which pays the money across to the tutor. 
  • Following an enquiry into their sector and business model, the Department for Business, Energy and Industrial Strategy (BEIS) concluded that the agencies were all employment agencies within the terms of the Employment Agencies Act 1973 ('the EAA').
  • Being within the EAA imposes stringent rules which are designed to protect workers and employees. Agencies cannot charge fees to find work, although they may charge for other services, such as CV preparation.
  • The agencies applied to the court for judicial review contending that the terms of the EAA do not apply to their businesses on the basis that their tutors are self-employed and offer services under contracts for services. They argued that they were not 'employed under' such contracts which do not fall within the definition of 'employment' for the purposes of the EAA.

The judge found that:

  • While contracts for services are not generally included in the definition of employment for other purposes, they are included in the EAA where employment has been given a specific, broad, statutory definition.
  • The definition of 'employment' in section 13(1) of the EAA includes in its application persons, whether natural or legal, including tutors, who provide their services on a self-employed basis as an independent contractor and the meanings assigned to 'employment agency' and 'employment business' for the purposes of the Act must be construed accordingly.

Comment

As the judge noted, "The outcome of these proceedings will have substantial business implications, regulatory and financial, for each of the claimants who may have to make substantial amendments to the way that they operate to ensure that they comply with the law..."

Although this is a non-tax case, this ruling means that these agencies and ones which operate similar business models are likely to fall within the Employment Intermediaries rules for tax.

Under the Employment Intermediaries Agency rules:

  • An agency must consider Employment Status for tax and then whether the worker is subject to (or to a right of) supervision, direction or control (SDC) by anyone as to the manner in which they provide the services.
  • Additionally, there is a quarterly reporting regime for agencies and intermediaries who supply self-employed workers that are not subject to deduction from pay under PAYE and NICs.

Unfortunately for the agencies, the PAYE rules and exceptions are complex and it is likely that the outcome of this case will have far-reaching consequences.

Useful guides

Agency Workers: Employment intermediaries rules
Agency workers are subject to PAYE and NICs on their earnings and employment intermediaries (agencies) have specific reporting requirements. The rules are further complicated by a number of exemptions and the requirement to assess each worker.

Employment Status & detailed checklist
An employer (including an Employment Agency) must assess any worker's employment status so that they can fulfill their obligations under employment and tax law. Start here to understand the complex rules, most of which have been established by past case law.

Self-employment: Starting work
If you are finding work what is the difference between being employed or self-employed? You apply for a job and the engager tells you that you are going to be self-employed.

  • What does this mean?
  • What is the difference between being self-employed and being an employee?
  • What rate of pay should I accept as a self-employed person?

External link

Simply Learning Tutor Agency & Others v BEIS [2020] EWHC 2461 

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