Termination Rights

If you have right to terminate the contract by giving a notice period (typically one month) it will indicate a contract of employment, as this is very typical of employees’ rights.

It therefore seems appropriate that you are only able to terminate the contract for the reasons of breach of contract or trust. Enabling the Hirer to have a termination clause (with or without notice) should not present a problem if you are genuinely self employed.  However, it is often the case that termination clauses are ‘mirrored’ for both sides. In this event you may, on the one hand, prefer to consider a termination clause with no notice on either side, or no termination (excepting breach) on the other.

Case law on this matter suggests:

  • the incorporation of an extended notice period was regarded as a neutral factor;
  • a Hirer’s right to terminate without notice may be a pointer towards self employment; and
  • the lack of a right to terminate on notice may be a pointer towards self employment.

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Market Investigations v Minister of Social Security
The interviewer in Market Investigations Ltd v The Minister of Social Security (1969) was found to be an employee. The absence of a right of dismissal other than for serious breach did not mean that the worker was necessarily self employed. Justice Cooke remarked: ‘So far as concerns of dismissal irrespective of breach, it is of course clear that the interviewer in this case could not, in the absence of a breach, be dismissed in the middle of an assignment. But there is nothing in this which is inconsistent with the contract being a contract of service. It is quite common for contracts of service to be entered into for fixed periods with no provision, express or implied, for dismissal during the specified period.’
What HMRC say
A power to terminate an engagement, for a reason other than a serious breach of contract, by giving notice of a specified length, may be indicative of a contract of employment but is not conclusive. The power can be expressly stated in the contract or it can be implied.

Equally, the absence of such a power would not point conclusively towards self employment. For example, where an engagement is for a specific piece of work, or a specified period of time, there is unlikely to be scope for dismissal by period of notice.

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