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Training levy is payable, subject to exemption levels,(see The training levy section) in respect of employees and labour-only contractors which worked in a leviable establishment during the relevant base period.  This section provides further information concerning employees and labour-only contractors, and the payments which should be declared.



Employers must declare the total number of ALL full and part-time employees who were employed by the establishment at any time during the year ending 5 April provided that they were working in Great Britain.


Total gross emoluments

Employers must declare the total gross emoluments paid to employees during the year ending 5 April.

By ‘total gross emoluments’ we mean the total payments made before deductions to all employees (including trainees).  This includes salaries, fees, wages, bonus and incentive payments, payments to trainees, taxable redundancy payments, statutory sick and maternity payments that appear on P60s, allowances (such as travel and accommodation allowances which are paid as part of salaries or wages) and any gratuities or other profits or incidental benefits of any kind obtained by an employee other than pension contributions.

The information needed can normally be found in your PAYE tax deduction cards (P11 deduction working sheets or P14 end of year summary sheets).


Labour-only contractors

Employers must declare the total number of ALL full and part-time persons engaged under labour-only agreements or arrangements in the establishment at any time during the year ending 5 April, provided that such individuals were mainly working in Great Britain.  The type of activity being performed under the agreement or arrangement is not relevant - the workers concerned have to be declared even if they are not undertaking principal or related engineering construction activities. 

Legislation defines labour-only contractors as those who are provided under an agreement or arrangement where the purpose is wholly or mainly the provision of services (including any incidental use of tools) rendered by a person or persons.  Labour-only as a term can be slightly misleading, as it includes agreements or arrangements that are "mainly" labour as well as "wholly" labour.  We take "wholly or mainly" to mean that labour is more than 50% of the cost of the agreement or arrangement. 

Please note how broad the definition of labour-only is in the legislation. In addition to "agreements", a labour-only "arrangement" is referred to in the definition.  This includes a separate part of a contract or a trade custom or practice.  

Each case has to be considered on its own facts, and it is difficult to draw up definitive rules for working out exactly when something is and when something is not “labour-only”.  What follows below should be treated as guidance only.  If you are unsure of any given case, please contact the ECITB's Levy and Scope team. 

Insofar as the ECITB is concerned, the two key features of a labour-only agreement or arrangement are that:-

  •  The contractor providing the services does so under your control or direction, either directly or through a contractor's management. Cases which ordinarily would be labour-only include:-

     Labour-only sub-contractors.

     Self-employed individuals (i.e. those who choose to manage their

     taxation affairs as "Schedule D" or "IR35 contractors").

     Individuals who provide their services through intermediary

     companies that may be owned by the same or associated individuals. 

Project work, where it is left to the contractor to organise its own management and resources to ensure that project requirements are met, may not be labour-only, if you did not have control and direction over the workers.

  •  It should be wholly or mainly the provision of services.  Accordingly, the provision of something other than services under a contract, for example, the provision of plant or materials, would not exclude the agreement or arrangement being labour-only provided that the services are the main element of the requirement under the agreement or arrangement.  Thus, agreements are considered to be labour-only in nature where tools or incidental materials, plant and equipment are provided. 

     Given those principles, the following can be difficult cases:-

     Where, in addition to the provision of labour services, the contractor

     is required to provide substantial quantities of main materials; and/or 

     Where, in addition to the provision of labour services, the contractor

     also has to supply plant (rather than just tools) or specialist equipment

     to get the job done.

We give some examples separately, but you should start by asking yourself the following questions:- 

     Did you control and direct the workers directly or indirectly? 

     If the contractor is supplying the necessary materials and

     equipment to get the job done, it may make it more likely that

     they are controlling and directing the workers in order to

     achieve completion of a project, for example, supplying the

     items for and constructing an item of plant, rather than labour

     working under your direct or indirect control. 

     Was the cost wholly or mainly attributable to labour, i.e. over 50%?

     Are the materials so substantial and/or the equipment so

     substantial or specialist that they (either individually or taken

     together) are the main part of the cost of the contract rather

     than the labour?  If so, there is no need to declare the workers

     in your Return.

     Where the contract price is a fixed sum, is it impossible to identify

     or estimate the part of the cost attributable to the labour cost of

     the work?  If it is not possible to conclude that labour is the main

     element (i.e. over 50% of the total cost), there is no need to declare

     the workers in your Return.  You may have to use common sense

     to resolve that issue. There will be some cases where the answer is

     obvious even if there is no separate itemisation on the invoice.

The separate examples illustrate the principles outlined above, and provide guidance on how to determine whether or not agreements or arrangements are labour-only in character.  Please note that the skill or activity within each example is not determinative of whether the item is labour-only or not – all the relevant circumstances have to be taken into account.


Total gross payments

Employers must declare the total gross payments paid in respect of the services provided under labour-only agreements or arrangements during the year ending 5 April. VAT added to such payments should NOT be included.  Declared payments must be the gross value (i.e. before any deductions are made). It should be noted that it is the service element of the labour-only payment that should be declared.  Any part of the payment that relates to incidental materials, or the provision of plant and specialist equipment, or the reimbursement of travel and subsistence costs incurred by the contractor should be removed from the amount included as labour-only.


Labour-only receipts

To ensure that levy is not paid twice in respect of the same workers, if any of the establishment’s employees or labour-only contractors have been hired out to other employers to work in establishments which are wholly or mainly engaged in engineering construction activities in Great Britain, then the payments received in respect of these workers (labour-only receipts) will be taken into account when calculating the amount of levy due.  

Employers wishing to declare any labour-only receipts should contact the ECITB's Levy and Scope team for a Labour-only Receipts Declaration form.


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