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 a substitute if they are unable to complete all of the work themselves). The value of the engagement should include the agreed allowable expenses, if appropriate to the engagement.

  • 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

    • 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 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 engagee.

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, or this is a new supplier to the University, send the engagee a Pre-NESA Questionnaire (PNQ) electronically so that you can start the engagement process. Please note: - the engagement value on the PNQ must include the estimated value of expenses, (where appropriate to the engagement). - the engagee must return the PNQ before the first day of work for the engagement.

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

Find the right Employment Status Assessment template

  • From the list of engagement roles below, identify if one fits the engagement that you are looking to set up. You will need to use the following information from the Pre-NESA Questionnaire:
    • the engagee Trading Type, i.e. are they a Sole Trader/individual or Limited Company/Partnership.
    • can the engagee provide a ‘substitute’ for the engagement?
    • has the work for the engagement already started?
  • Note the template reference number and double-click to open the template.
  • Check the answers on the template are consistent with the engagement that you are looking to set up and note the HMRC Determination from the coloured banner at the start of the template document.

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:

Trading Type 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:

Trading Type 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:

Trading Type 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:

Trading Type Engager requirements Started/Not Started Template Ref No.
Sole trader No Substitution Not started EP4

Performer / Artist (including DJ) - without substitution

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

Trading Type Engager requirements Started/Not Started Template Ref No.
Sole trader No Substitution Not started PA1
Limited Company No Substitution Not started PA2
Partnership No Substitution Not started PA3

Occasional Guest Lecturer roles without substitution

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

Trading Type Engager requirements Started/Not Started Template Ref No.
Sole trader - Engagee determines hours No Substitution Not started OLG1
Sole trader - University determines hours No Substitution Not started OLG2
Limited Company - Engagee determines hours No Substitution Not started OLG3
Limited Company - University determines hours No Substitution Not started OLG4

Translator roles without substitution

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

Trading Type Engager requirements Started/Not Started Template Ref No.
Sole trader No Substitution Not started T1
Limited Company No Substitution Not started T2

Hourly-paid Lecturer without substitution

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

Trading Type Engager requirements Started/Not Started Template Ref No.
Sole trader No Substitution Not started HPL4

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.

When you select ‘Send Assessment’ in the Webapp you will receive 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 based on the determination of their employment and IR35 status.

i. If the determination is a Contractor (‘Non-Employee Contract for Services’ or ‘Non-Employee Company/Partnership – non-IR35’) under a ‘Contract for Services’, you will need to raise a Purchase Order in line with Procurement processes so that when the work is completed, it can be paid through an invoice.

ii. If the engagee is an individual or Sole Trader, has indicated on the PNQ they cannot provide an invoice and the contract value is below £750, then a NESEC (a Non-employment Short-term Engagement Contract) may be used, otherwise a Contracts for Services will apply. If a NESEC is used, a Purchase Order must be raised in line with Procurement processes, so that when the work is completed, it can be paid through the NESEC.

iii. If the determination is a Contractor Non-Employee Company/Partnership – IR35, you will need to raise a Purchase Order in line with Procurement processes. The deduction of the relevant income tax and national insurance will be taken from the invoiced amount and payment will be made via Payroll. You must check the detailed guidance on the action required to progress an IR35 engagement using the link on the Webapp email for the assessment.

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.