University of Bath

Engaging Contractors - through Non-Employment Status Assessment (NESA)

To carry out an assessment of employment status if required and engage an individual for contract work

When to use NESA

You may be able to engage an individual as a contractor – subject to the status of the engagement under the tax/Her Majesty’s Revenue & Customs (HMRC) rules. This is actioned through a 'Contract for Services', which is managed through Procurement (Purchasing Services).

The University is required to ‘test’ the employment status of the engagement by applying a number of set questions to the circumstances of the engagement before any work is undertaken.

To do this, as the engager you will need to follow the three step process:

Step 1) Check if you need an Employment Status assessment

Step 2) Use the NESA webpage to find the right assessment and the NESA Webapp to confirm the ESS determination

Step 3) Follow the prompts to engage the contractor in the appropriate way

A more detailed process map for these 3 steps can be found at NESA Process Map

Step 1) Check if you need an Employment Status assessment

Before you start the process make sure that you - as the engager - have information on the following;

  • engagee - the individual who will be undertaking the work (including whether they are set up sole trader, limited company or partnership).

  • engagement - the work that they will be doing (including how they will be paid, over what period and whether they will provide substitute if they are unable to complete all of the work themselves).

  • Please note that you do not need to carry out an Employment Status assessment in the following situations:

  • If you are purchasing goods (and not services), if you engaging a service provided by a team or if you are you are engaging an individual from a Limited Company that has >10 staff - this is a straight-forward Contract for Service situation; - please go straight to Procurement / Purchasing Services and by email

  • If the engagement is hourly paid and without substitution - it is likely to be a worker – go straight to the Hourly Paid Workers System

  • If an External Examiner (EE) – please follow existing process for UG and PG EEs – an assessment has been made for PG External Examiners

Run Supplier Check on Agresso to check if an Employment Assessment is required:

Log onto Agresso and run the Supplier Type and PO Method Report for the engager

It will tell you if they are an existing supplier and if a Employment Status assessment is required

Pre-NESA questionnaire

If an assessment is required send the engagee a Pre-NESA Questionnaire (PNQ) electronically so that you can start the engagement process.

Step 2a) Find a template or undertake an ESS assessment

Find the right Employment Status Assessment template

Based on the information on the Pre-NESA Questionnaire:

  • From the list of engagement roles below, identify which one fits the engagement that you are looking to set up. This will identify a template.

  • Note the template reference number and double-click to open the template.

  • Check that the answers on the template are consistent with the engagement that you are looking to set up.

If no template that fits:

If you cannot find a template which best describes the role and circumstances of the engagement, you will need carry out an assessment using the HMRC's Employment Status System tool. Please contact your HR Business Partner for assistance with this.

Templates for Engagements With Substitution

These templates apply to all roles with the engager requirements as specified:

Engagee set-up Engager requirements Started/Not Started Template Ref No.
Sole trader Substitution Not started C1
Limited Company Substitution Not started C2
Partnership Substitution Not started C3

Templates for Engagements Without Substitution

General highly skilled contractor roles without substitution

These templates apply to all roles with the engager requirements as specified:

Engagee set-up Engager requirements Started/Not Started Template Ref No.
Sole trader No Substitution Not started C4
Limited Company No Substitution Not started C5
Partnership No Substitution Not started C6

Distance Learning Mentor roles without substitution

These templates apply to all roles with the engager requirements as specified:

Engagee set-up Engager requirements Started/Not Started Template Ref No.
Sole trader No Substitution Not started DLM5
Limited Company No Substitution Not started DLM6
Partnership No Substitution Not started DLM7

Expert Patient roles without substitution

These templates apply to all roles with the engager requirements as specified:

Engagee set-up Engager requirements Started/Not Started Template Ref No.
Sole trader No Substitution Not started EP4

Step 2b) Log into the NESA Web App and upload assessment

Make sure that all mandatory information is accurate as this will be used for contracts. Mandatory fields will be shown.

Step 3) Follow the prompts to engage the contractor

The NESA Web App will confirm the determination in terms of employment and tax status and workflow you into either the purchasing services or HR processes to set up and action the engagement. It will send you an email confirming what you need to do next to progress the contract.

Please follow these instructions on this email to set up a contract and the engagee on the basis dependent on the determination of their employment and IR35 status.

i. If the determination is as a contractor (non-employee) under a Contract for Services then you will need to raise a Purchase Order in line with Procurement (Purchasing Services) processes prior to payment so that when the work is completed, it can be through an invoice.

ii. If the contract value is low (below £750), then a NESEC – a non-employment Short-term Engagement Contract may be used which simplifies the process for engagees.

iii. If the determination is that they are a contractor - IR35 applies then a revised process will be followed which includes the deduction of tax from the invoiced amount.

iv. If the determination is as a worker (employed) this will take you through to the hourly-paid worker system to action an hourly-paid (casual) contract.

The processes for i. to iii. are managed by Procurement / Purchasing Services.

The processes for iv. are managed by your HR Operations Administrator.

Details of training in using the University’s processes and systems for those requisitioning or purchasing goods and services can be found at Purchasing Training.