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Am I in Scope?

What is an Establishment?

Where a company or business organisation operates as one unit, it is probably an ‘establishment’.

Alternatively, where a company or business organisation is structured in such a way that it operates as different units, an ‘establishment’ could be any separate, identifiable part of the business (for example, division, subsidiary or associated company in a group, business stream, project group, etc). A separate identifiable establishment could mean a part of the business that is geographically separate from other premises or has a separate management structure, or produces separate profit and loss accounts, etc.

It should be noted that:-

  • Employers are for the most part Limited companies, but could be partnerships, sole traders or other entities. 
  • An employer can operate one or more separate establishments. 
  • Often the entire organisation of an employer (as opposed to parts) constitutes an establishment. In such cases, the employer and the establishment are one and the same.

In determining these matters, the ECITB will have regard to the organisational structure of the employer under consideration.

If the establishment is wholly or mainly engaged in principal and related engineering construction activities, it is a ‘leviable establishment’.

The ECITB maintains a Register of Leviable Establishments. This identifies employers which operate leviable establishments, and the establishments themselves.

Engineering Construction Activities

The following is a summary of the activities which are described as engineering construction activities. Establishments which are wholly or mainly undertaking principal and/or related activities are leviable so long as the activities are carried out in Great Britain (England, Scotland and Wales) or its offshore waters. A full definition of engineering construction activities is shown at Schedule 1, paragraph 1. of the 1991 Board Order. A copy of the Order is available at the Download documents section.

Principal activities

1 Assembly, construction, dismantling, erection, fabrication, fitting, inspection, installation, maintenance, repair, replacement or testing on site of any chemical, electrical or mechanical apparatus, machinery or plant of a chemical works, gas making or gas treatment works, nuclear or thermal power station, nuclear waste reprocessing site, hydro-electric station, oil refinery or oil terminal or of other apparatus, machinery or plant concerned with the exploration for or exploitation of oil or gas, metal smelter, steel mill, paper mill or brewery, the processing and production of human or animal food, pharmaceutical, cosmetic and petrochemical products, cement, concrete bricks, distilling alcohol or other products, glass, paper and sewerage and any other installation involving the processing of any product.
2 Planning, designing, commissioning or procuring by way of contract or otherwise of any apparatus, machinery or plant mentioned at 1 above carried on in association with any activity mentioned at 1 above or in association with any project for such an activity.
3 Supervision of the assembly, construction, dismantling, erection, fabrication, fitting, inspection, installation, maintenance, repair, replacement or testing of any apparatus, machinery or plant mentioned at 1 above when carried out on site.
4 The erection and/or dismantling of the main framework of a building or other structure that is made of steel or other metal where the building or structure is erected or dismantled on any site (not necessarily on a site where a product is processed). Types of structures erected or dismantled could include, for example, supermarkets, warehouses, stadiums, agricultural buildings, office blocks, etc.
5 The hiring out by an employer of individuals in his employment to employers who are engaged in any of the activities listed above where the individuals being hired out will be engaged in such activities.

Related activities

The following activities are related activities provided they are incidental or ancillary to the principal activities of the engineering construction industry.

1 Research, development, design or engineering construction drawing (either created by hand or by computer related software) or dynamic simulation
2 Buying, selling, hiring out, testing (including NDT), advertising, packing, distribution, transport or any similar operations
3 Operations of a kind performed at office premises or laboratories, or at stores, warehouses or similar places
4 Cleaning, washing or garaging vehicles or carrying out running repairs or minor adjustments thereto
5 Training of employees or apprentices

Other activities

Provided an establishment is wholly or mainly engaged in the principal and related activities of the engineering construction industry, the following activities are also engineering construction activities.

1 Any activities undertaken in the administration, control or direction of an establishment or establishments.
2 Any activities of industry or commerce.

Wholly or mainly engaged in engineering construction activities

When considering whether an establishment is wholly or mainly engaged in principal and related engineering construction activities, the ECITB will primarily give consideration to the balance of activities of the establishment's workers.

If 50% or more of the establishment's total workforce is engaged in principal and related engineering construction activities, then the establishment is mainly engaged in engineering construction activities and ALL workers in the establishment are required to be declared to the ECITB and may be subject to the levy.

Full time equivalent

When looking at any workers who are engaged in more than one activity, the ECITB will calculate the Full Time Equivalent. For example, if there are 10 workers each engaged for 60% of their time in welding pipework on a power station and 40% of their time fabricating in a workshop at the establishment’s own premises, the full time equivalent will be that 6 workers are engaged in principal engineering construction activities and 4 workers are engaged in other activities of industry or commerce.

Base Period

The “base period” is the period commencing on 6 April and ending on 5 April.

The ECITB must assess the amount of levy to be paid in respect of each leviable establishment of an employer for each base period. For an employer to be assessed for levy, it needs to have an operated an engineering construction establishment that traded for at least 27 weeks (not necessarily continuous weeks) during the base period or for at least half of the period between when the establishment commenced trading and the last day of the base period.

Where an establishment commences business during the base period, it will be a leviable establishment if its workers were wholly or mainly undertaking engineering construction activities for more than half of the period from the commencement of activities to the following 5 April.

In cases where an employer ceases trading during the base period, whether or not it is assessable for levy will depend on whether the establishment operated for more than 27 weeks during the base period.

If ownership of a leviable establishment changes, the person who is the owner or has responsibility for the establishment as at 31 December following the based period will be the person liable to pay any levy which is due in respect of the base period.

 

Reviewing an establishments activities

When reviewing the activities of an employer’s establishment in order to confirm whether or not it should be added to or remain on the ECITB’s Register of Leviable Establishments, the following four criteria will be considered:-

  • Whether there is an establishment.
  • Whether the establishment undertakes engineering construction activities.
  • Whether the establishment is wholly or mainly engaged in engineering construction activities.
  • Whether the establishment was wholly or mainly engaged in engineering construction activities during the relevant Base Period.

Each criteria is considered separately. If any of the criteria cannot be satisfied, then a leviable establishment cannot be identified and the establishment cannot be added to or remain on the ECITB’s Register of Leviable Establishments.

New establishments

Employers which may be operating engineering construction establishments and which have not been identified before will be contacted by ECITB staff who will seek to arrange to visit the employer and obtain an understanding of and information on the business. As part of the initial contact, the employer will be requested to complete a Business & Activity Return. This will provide information on matters such as the establishment, the activities of the business, numbers of workers, etc. Where available, information in the public domain may also be reviewed, for example, the employer’s website, promotional literature and published accounts.

Following the collection and consideration of all available information (including any from discussions with the employer), a report will be produced by a senior manager which addresses the four key areas detailed above. The report, known as an Establishment Review Report, will be reviewed by the ECITB’s Board Secretary, who will make the final decision as to whether or not an establishment should be added to or remain on the ECITB’s Register of Leviable Establishments.

The employer will then be notified in writing of the ECITB’s decision.

Existing leviable establishments

It may be that an engineering construction establishment ceases to be a leviable establishment. This could occur for a variety of reasons. The most common are as follows:-

  • The establishment ceases to undertake engineering construction activities, or to be mainly engaged in such activities in a base period; 
  • The establishment does not wholly or mainly engage in engineering construction activities for the requisite period in the base period; and
  • The establishment ceases to exist.

In such circumstances, the ECITB will undertake a review, and the criteria referred to above will be applied. It may be that any changes will not be apparent to the ECITB from information available. Thus, the employer may have to bring such information to the ECITB’s attention to enable a review to be considered and/or concluded. The ECITB will consult with employers on such issues to ensure that the correct conclusion is reached, and will often require information (sometimes of a detailed nature) in order to confirm the position.