Why is “MOO” – mutuality of obligation so important?
There is a mutuality of obligation between an end-user client (or employer) and worker (employee), if the client is obliged to provide paid work and the worker is obliged to accept and complete the work.
This is typical of most employer-employee relationships, in which the employee is paid by their employer each day, week or month and, within the bounds of job descriptions, even if not in a contract, and can be asked to undertake tasks across a spectrum of activities that go beyond their core role. This state of affairs continues until the employee decides to take another job, or is made redundant.
HMRC’s definition of MOO
In its Employment Status Manual, ESM0543 – Guide to Determining Status: mutuality of obligation, HMRC says that:
“There must be an irreducible minimum of mutual obligation for there to be a contract of service. That irreducible minimum is
- that the “engager” must be obliged to pay a wage or other remuneration, and
- that the “worker” must be obliged to provide his or her own work or skill.
Mutuality and contracts
HMRC continues, saying that there does not need to be a contract in place, or a clause in a contract that explicitly says the client must offer work and the worker must take it. Crucially, mutuality of obligation can exist without a contract.
What does this mean in plain English?
Is the work you do be doing “for” services or “of” services? If it is “of services” then you are a worker. If it is “for services” then you are not.
1. You are asked to assist a friend with doing the marketing for their business. They tell you they will pay you £50 for doing 1 hour a day for 5 days for promoting their business. They give you a list of social media platforms, login accounts for the business and they also give you a list of what to promote and when to promote it. You are very clearly a worker as they are obliged to pay you £50 for 5 hours work to carry out all the marketing tasks they have given you to do during this period, and the work you are doing is “of” services.
2. You are asked to assist a friend with doing the marketing for their business. They tell you that they will pay you £50 for doing 1 hour a day for 5 days for promoting their business. You tell them that you will promote their business on a number of social media accounts which you ask them to set up (or provide you with the logins) for their business. You decide exactly when you are going to do it, and what you are going to promote. You confirm with them that they are happy with what you are going to do, and agree with them any minor changes they suggest. You are clearly not a worker as the work you are doing is “for” services.
It can sometimes be a fine line between working “for” services and “of” services. But when we look at the whole picture, it can become clearer.