"As an employee you can also pick your own tools or figure out how to do the work by yourself"
That hasn't really been my experience doing software development as an employee. They mandate lots of things like methodology (scrum, scaled agile, etc), tools like their standard IDE, coding standards, style guides, mandatory use of JIRA or similar, SCM standards, which languages are allowed, and so on. I'm aware some places might be highly flexible, but I assume that's less common.
If I was commissioning a project I would require it to be implemented using this and that technology and adhere to industry standards and so on. There is not much flexibility, and what IDE you are using are immaterial when it comes to whether you are employed or not.
An IDE could come up in all three of those. And the law isn't black-and-white...it's the cumulative pile of these things that drives a ruling. So an IDE is absolutely material as one of many mandated tools, processes, or training subjects.
In my country for example Upwork would fail for these reasons:
Substitution - I understand that you cannot subcontract the work without the client knowledge and approval. That means the service is most likely personal. Even if the client agrees etc. and the subcontractor is only allowed to be from the Upwork pool (e.g. the client could hire them directly) then that also doesn't count as substitution.
Control and direction - if the client is directing the worker from the outset and on an ongoing basis and if the worker needs to comply with any standards adopted by client's organisation e.g. the language, coding standards, APIs, then that counts as employment. Especially if the worker does not have final say about how the work is delivered.
Control and direction - if you ask the worker to attend meetings or work on a certain schedule e.g. to align with the organisation or even if they are allowed to have flexible hours - then that's no different from employment.
Basically you can only get around this if the work is done to a certain deadline and you have no meetings after the work commenced.
Provision of equipment - things like a laptop and most software are excluded from consideration in my country. So if you need to buy a laptop for work, it doesn't count.
Financial Risk - basically it will only count as freelancing if you risk severe penalties for missing deadlines. Having to work on a project after hours fixing bugs or making amendments does not count as financial risk. The same as having to buy equipment or software just for that project unless the value is substantial.
Business on own account - this one is not so important - but basically you need to have a registered company, office, accountant, stationery, website, working with multiple clients (but employees can do multiple jobs too, so there is not much bearing)
Business on own account - if project takes majority of your time, so that you cannot work on other projects at the same time, then that also suggests employment.
Essentially for work to count as freelance it should look like this: you negotiate what needs to be done, rough specification is being made, you agree to milestones and possible penalties and then you only talk to client when a milestone is reached. The most granular way of payment is per milestone - e.g. hourly billing is employment most of the time.
There are exemptions, for example if you work for a private person or a small company.
Here is more comprehensive guidance with case studies. IR35 has been tightened so that from April pretty much any work will be considered as employment.
> Substitution - I understand that you cannot subcontract the work without the client knowledge and approval. That means the service is most likely personal.
Do you know the rational behind this one? Obviously when you hire a solo freelancer you want to work with that particular freelancer. Why would this single clause being false mark you as being an employee?
It's just how they defined it - essentially personal service == employment. They understand that if you really run a business then your client hires your company to create a product for them and it is up to the company who and how makes it, otherwise your company in their eyes is just a vehicle to avoid tax. What is most bizarre is that then you become an employee only for tax purposes - that is you are not necessarily gaining any employment rights, but in practice a freelancer has to be an employee of an agency, so you retain employment rights in exchange for severe pay cut. From April true freelancing will be very difficult because of that. For example if you are signed up to an agency, you are required to look for new contracts when you have a downtime and you may be required to accept contracts if agency finds one.
My own opinion is that such agencies corrupted the bodies responsible for these law changes - agencies will be getting % for essentially doing nothing and freelancers won't be able to use profits to fund their own projects (not in the way it used to be - it has become much more expensive).
This includes solo freelancers though? So I've always seen the advice that to earn more, you can't be seen as a replaceable commodity and you need to attract clients that want to work with you in particular. This ruins that?
I heard that as long as your contract includes something about how you could be replaced by someone equally skilled, you can work around this? The client can still terminate the contract if they didn't like the replacement.
That hasn't really been my experience doing software development as an employee. They mandate lots of things like methodology (scrum, scaled agile, etc), tools like their standard IDE, coding standards, style guides, mandatory use of JIRA or similar, SCM standards, which languages are allowed, and so on. I'm aware some places might be highly flexible, but I assume that's less common.