ESM11115 - Check Employment Status For Tax: Financial risk – Putting work right

CEST asks ‘If your organisation was not happy with the work, would the worker have to put it right?’ or ‘If the client was not happy with your work, would you have to put it right?’

If a worker must put right faulty work and they/you bear significant cost doing this, it would fall within the ‘Yes, unpaid and they/you would have extra costs that the hirer/you would not pay for’ category for CEST.

If a worker must put right faulty work and do not incur any tangible costs to put it right, but do suffer opportunity cost due to this time it takes to rectify, this would fall within the ‘Yes, unpaid but their/your only cost would be losing the opportunity to do other work’ category for CEST. Opportunity cost for CEST is losing the ability to earn money elsewhere as the worker must spend the time rectifying errors.

If a worker does rectify errors but the hirer pays the worker their normal rate or fee for doing so and the worker does this during normal working hours for the hirer, this would fall within the ‘Yes, they/you would fix it in their/your usual hours at their/your usual rate or fee, category for CEST.’

If a worker cannot rectify errors because the task the worker was hired for is a one off event that is now over or the task was relevant only to a particular point in time then this falls within the ‘No, the work is time-specific or for a single event’ category for CEST.

If a worker does not have to rectify errors and the task wasn’t a one-off or time specific, then this would fall within the ‘No’ category for CEST.

EXAMPLE

Sandeep is a joiner who builds and fits kitchens for a large housing company. A kitchen Sandeep fitted does not meet the required standard and must be corrected.

• If Sandeep pays for new materials to rectify the error at his own expense and does this in his own time then this is unpaid and at extra cost to Sandeep.
• If Sandeep rectifies the work but the housing company pays for the materials and Sandeep does this rather than take on work for someone else, this would be unpaid and Sandeep will have lost the opportunity to perform other work.
• If the housing company pays Sandeep his normal rate and he rectifies the errors in normal working hours for the housing company, then this is done in his usual hours and his normal rate or fee.
• If Sandeep fits the kitchen for a one day house showing, after which the kitchen is removed, there will not be a need for any errors to be rectified because the kitchen was only needed to be in a state to be viewed, this would fall within the ‘No, the work is time-specific or for a single event’ category for CEST.

If the housing company does not require errors to be rectified, for example they get other joiners to fix errors as part of a quality control process, then this would fall within the ‘No’ category for CEST. The task here isn’t time specific or a one-off event.