CIC Association

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Oops - didn't see the discussion button and sent as a message - my sincere apologies!

Trying again :

Looking for some advice on this issue, as what I have read thus far is far from clear!

Some background : We install wind turbines. We started in March and all directors have thus far worked unpaid. We are about to start payment. Some directors will be employees paid weekly (admin staff) other directors will be paid on a job by job basis. One of our directors is a trained electrician who used to be self employed. Because of the work we have developed he would prefer to be self employed for the electrical stuff. He has his own tools and own insurance.

What we are trying to establish is wether we can legally subcontract some of the work to one of our own directors. My reading so far seems very far from clear, with stuff to do with IR35 perhaps looking relevant.

If anyone has any ideas or answers it would very much be appreciated!



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Replies to This Discussion

Ronie, you need to start by separating in your mind the work someone does as a Director and the work they do as an electrician (for example).

The job of a Director is to run the company. The job of a self-employed electrician is to install electrical circuits.

In one's role as a Director one could never by self-employed (even non-Exec Directors are employed, they might just have lots of employments). In one's role as an electrician one could easily be employed or self-employed.



Legally, you can subcontract some of the installation work to Directors as long as (being a CIC) you pay them the market rates. For an electrician this should be pretty easy to determine, so I don't see an issue here.



You can still sub-contract the installation work to a Director, and it could be done through his self-employment, if he also does other work as a self-employed individual for other customers. If this company is his only customer, then IR35 type things would kick in. However, if he is genuinely in business as an electrician and does work for other people, has business cards, can send a substitute to do the work and doesn't actually have to do it himself then the company could contract with him as a self-employed person.


In this case the substitution point is going to be key. If the company expects that one individual to do all the relevant work, then self-employed is probably not possible. However, if the company realises they are buying from his self-employed business and he could in theory send along his apprentice and his mate to do some of the work, then it is self-employed.



Hi Alastair,

Thanks for this. It helps quite a lot. I think he would be an employee for most of the installation work. With regards to the electrical thing, he will have other customers, but he works alone. So when we contract him to do the work, he cannot send anyone else as he doesn't have anyone else!

Not quite sure where that leaves things with regards to the substitution point .....

Incredible how complex the whole system is really!

Thanks for your time so far - much appreciated!


The Good News is that the fact that even though he doesn't have any employees this doesn't remove his right to send a substitute if he wanted. Ultimately, if he was ill say, he could take the decision to sub-contract again to a competitor for example.


However, it is going to be more complicated if he is doing other installation work as an employee. I think you might struggle to separate the electrical work from the other work. If doing the electrical work as self-employed is a big issue then I suggest you approach your local tax office for a decision up front, or perhaps someone needs to take some real (insured) advice from a local accountant.


Happy Holidays :)

thanks for this discussion - found it very useful


thePeoplesPower CIC - cheaper energy together

How does this work for someone who is self employed but is working on their own as a counsellor or supervisor but is also a director of a CIC

Trish Cox

It is just the same Trish.


You sell self-employed counselling services (possibly selling them to the CIC in question) and you should be renumerated separately for your Director duties too.

Hi everyone,

We have been having this exact debate with our Business Mentor. He believes that Limited Company (which CIC's are) Directors are always self employed. Although it is my understanding (from memory) that Directors can be employeed by the company.

I have been trying to research this further, and the only references I can find are those related to insolvancy; where case law has decided that as long as the director has a contract of employment with the company, and has 'acted like an employee' that after the company has become insolvant they have been awarded statutory redundancy pay.

My question is, if the Directors are employed, does this award the directors other statutory entitlements such as sick pay, maternity pay, annual leave etc.

Also, our income is not yet stable (we only formed in January), how would we calculate a salary, when this is unknown.

Thanks for your thoughts




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