Employing people on a self employed basis?

[Fred_the_frog]

If you want to employ someone on a self employed basis, do you just have to ask them to register as self employed and then you start giving them work?

Or are there any other steps?

 

[Anonymouse72]

Hmrc guidance,www.hmrc.gov.uk/employment-status/index.htm

 

[kevin.doran]

As per the above link, it's not your decision as to whether your 'employee' is self employed or not.

 

[Fred_the_frog]

As per the above link, it's not your decision as to whether your 'employee' is self employed or not.

Yes but that's not the question. I am asking if all they have to do is register as self employed. (Do I need any contracts or insurance or anything)

 

[serendipitybusiness]

There are quite a lot of laws surrounding this and I know personally someone who has been sued for doing this the wrong way. I am sure there are others that know the ins and outs and will fill you in. However this is the situation as I know it. Please feel free to correct me if I am wrong.

Independant contractor - you can hire them as an independent contractor, if that independent contractor works solely for you then you only have 2 years before you have to bring them on as an employee or break the contract.

Business contract - you have a relationship with the business not the individual, that business is free to work with other businesses.

Even though you hire someone and they register as self employed and pay their own tax you are still at risk of a court determining that they are a independent contractor or an employee.

This is based on factors of control, how much control you have in the relationship ie can they work with other businesses, do they have a dedicated working time dictated by you, how much control you have on the work they do, how they represent themselves to customers, where do they work etc.

There are a lot of companies skirting the edges on this, it is a fine line, read up.

 

[serendipitybusiness]

Yes they register as self employed, fill in their own self assessment and pay their own tax and nics. You may want to look into public liability insurance, employers liability insurance and put aside some legal costs for contracts.

 

[Swisaw]

All you need to do is to ask them sign work contract on the basis of self-employment. After that they become responsible for their tax and insurance.

 

[serendipitybusiness]

All you need to do is to ask them sign work contract on the basis of self-employment. After that they become responsible for their tax and insurance.

No it really isn't that simple read the link above, the person I mentioned above had done this and ended up getting sued for 50K as in court they upheld that the plaintiff was infact an employee and as such he as the defendant was liable for damages.

 

[Fred_the_frog]

No it really isn't that simple read the link above, the person I mentioned above had done this and ended up getting sued for 50K as in court they upheld that the plaintiff was infact an employee and as such he as the defendant was liable for damages.

The people I want to employ as self employed will be given a date and will be required to complete the work within that week, so it's up to them when they do it, so long as it is within the week.

They are also allowed to hire someone else to do the work (but the self employed person will be liable if the work isn't done correctly by the person they have got to do the job).

They have the right to refuse the work and end the contract when they want (with a bit of notice, of course).

What insurance would I need to cover me if that £50k thing happened to me as a sole trader? (Obviously I would want to be covered as a sole trader!!)

 

[serendipitybusiness]

From what you are describing it sounds like this is virtual work on a job per job basis ie as a web designers, freelancers etc where you may use them one week but then not until a couple of weeks later etc. They will most likely have other clients too and from the guidelines you have set (ie they can hire others etc) you should be fine.

This scenario was surrounding sales staff that worked 5/6 days a week every week and visited the premises daily, had sales meetings etc.

You may want to look into drawing up an NDA and Service Level Agreement if you are using a lot of freelancers. However many companies just type these up and they are not actually legally binding. So I don't have a copy of either that I could hand over to you with confidence.

 

[businessfunding]

as the main contractor you are responsible for ensuring that your contractors are acting correctly as sole traders (eg declaring income etc)

You will probably also need PL insurance - or at least to ensure that they are covered

What are they expected to do?

 

[Talay]

The people I want to employ as self employed will be given a date and will be required to complete the work within that week, so it's up to them when they do it, so long as it is within the week.

They are also allowed to hire someone else to do the work (but the self employed person will be liable if the work isn't done correctly by the person they have got to do the job).

They have the right to refuse the work and end the contract when they want (with a bit of notice, of course).

What insurance would I need to cover me if that £50k thing happened to me as a sole trader? (Obviously I would want to be covered as a sole trader!!)

You can't insure against fines because you defrauded HMRC !

Additionally, your liability insurance will most likely require that any bona fide subcontractors have their own liability insurance at least to the extent of your liability insurance. Your "self employed" folk probably won't bother and if you don't check, your insurance will be invalidated. This would exist further down the line to a subcontractor of a subcontractor etc.

It looks like you are trying to set up this can of worms to avoid a little national insurance and employer costs. If your business model cannot absorb these without illegally trading then there is something fundamentally wrong and you need to address that.

I would have thought a zero hours contract of employment would have covered occasional but repetitive labour. However, there is nothing wrong in employing them as employed for short periods either. Most employer liability insurance contracts have an allowance for temporary labour as well without additional costs.

I know you may be competing with some companies and individuals who break the law and offer cheaper prices but you should perhaps look to sell the integrity of your operation rather than stoop to their level. I for one would not buy from a business operating illegally or abusing their employees.

 

[Fred_the_frog]

You can't insure against fines because you defrauded HMRC !

Additionally, your liability insurance will most likely require that any bona fide subcontractors have their own liability insurance at least to the extent of your liability insurance. Your "self employed" folk probably won't bother and if you don't check, your insurance will be invalidated. This would exist further down the line to a subcontractor of a subcontractor etc.

It looks like you are trying to set up this can of worms to avoid a little national insurance and employer costs. If your business model cannot absorb these without illegally trading then there is something fundamentally wrong and you need to address that.

I would have thought a zero hours contract of employment would have covered occasional but repetitive labour. However, there is nothing wrong in employing them as employed for short periods either. Most employer liability insurance contracts have an allowance for temporary labour as well without additional costs.

I know you may be competing with some companies and individuals who break the law and offer cheaper prices but you should perhaps look to sell the integrity of your operation rather than stoop to their level. I for one would not buy from a business operating illegally or abusing their employees.

I'm not trying to break the law or avoid tax or anything, it's just i've never employed anyone and i've heard it's difficult to employ as a sole trader. Also I don't have the money to pay for solicitors and whatever to draw up long and confusing contracts!


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From what you are describing it sounds like this is virtual work on a job per job basis ie as a web designers, freelancers etc where you may use them one week but then not until a couple of weeks later etc. They will most likely have other clients too and from the guidelines you have set (ie they can hire others etc) you should be fine.

This scenario was surrounding sales staff that worked 5/6 days a week every week and visited the premises daily, had sales meetings etc.

You may want to look into drawing up an NDA and Service Level Agreement if you are using a lot of freelancers. However many companies just type these up and they are not actually legally binding. So I don't have a copy of either that I could hand over to you with confidence.

The people will be doing regular work for me but non regular- let me explain. (It's not virtual work, it's physical, but it's basically the same, being paid per job etc)

They won't be doing work every day of every week. I will give them work as and when I get it, and they have a week to do the work (or refuse it and I'll use someone else)

For example, it won't be them sitting in an office all day and every day doing work for me. They will be at home doing their own stuff and I will send them an email with work I need doing. Then if they accept I drop the work to them and they do it within a time frame, then invoice me. I pay them and they go back to doing their own thing until I get more work to hand to them.

Sometimes the work could be one after the other (Finish one job, start another) and sometimes there could be breaks in between (finish one job, wait two weeks, get a new job).


With the NDA, is that simply to stop them from telling other clients how much I am paying/ who my customers are?

 

[Christine Hough]

It looks like you are trying to set up this can of worms to avoid a little national insurance and employer costs. If your business model cannot absorb these without illegally trading then there is something fundamentally wrong and you need to address that.

That's assuming an awful lot.

There are a whole host of jobs which are legitimately freelance. And we do not know what sort of work the OP is asking for.

We know it is not done on his premises. The actual hours worked and when are in the control of the sub contractor and they can in turn pass some work on.

I have subcontracted development work, writing work, auditing work as needed. It is perfectly valid when used properly.

 

[serendipitybusiness]

I agree thats a bit harsh lol. I don't think the op has any intention of defrauding the HRMC or abusing his employees. The way the OP has described his intended operations is standard practice in a lot of fields. I am contracted all the time on a job per job basis I also bring in specialists ie illustrators, php, copy writers etc in the same line. With video production, crew on many occasions are contracted in this way same with construction etc.

In many cases if done correctly it is actually to the benefit of the person being hired as they can claim expenses etc. For longer contracts we have been offered paye in the past and preferred not to go down this route as it is easier for us to bill as a business rather than as an individual to keep our own paye system streamlined.

 

[seopeak]

Yes like this, but they tax don't like at all this kind of tactics because usually the dont get their money from the freelancers,...

 

[Christine Hough]

Freelancers do pay tax and NI.
Its a different system to being employed and the question is, 'Is the job really freelance or employed?'

There are other differences to consider such as ease of increasing/ decreasing/stopping work and employee benefits and job security, provision of equipment and so on. And of course opportunity to work for several people/companies.

It is not right to see this only as a tax reduction option.

 

[serendipitybusiness]

Sorry Fred

I didn't see your post, yes NDA is to stop people passing on confidential business intelligence onto third parties or say setting up a website and saying look at the work I did etc. You may not need it from what you describe, you may need to create a service level agreement though just incase they do a pants job. I would speak to a professional regarding insurance and liability as it is physical, I am not really qualified to comment on that side.

 

[serendipitybusiness]

Yes like this, but they tax don't like at all this kind of tactics because usually the dont get their money from the freelancers,...

Hmm I am not sure I agree here, I know plenty of freelancers that pay the tax man just like anyone else.

 

[Fred_the_frog]

Sorry Fred

I didn't see your post, yes NDA is to stop people passing on confidential business intelligence onto third parties or say setting up a website and saying look at the work I did etc. You may not need it from what you describe, you may need to create a service level agreement though just incase they do a pants job. I would speak to a professional regarding insurance and liability as it is physical, I am not really qualified to comment on that side.

Thanks. Should it just be a general one or do I need to be specific on everything they can't do?

 

[Fred_the_frog]

Another quick question- Do I need a document for the self employed person to sign that states exactly how jobs will be given to them, how to accept/ decline jobs, who is responsible if they get someone else to do the job, how to tell me the job has been done, etc... & to confirm they know that they should be paying NI and tax stuff?

 

[Mpg]

Another quick question- Do I need a document for the self employed person to sign that states exactly how jobs will be given to them, how to accept/ decline jobs, who is responsible if they get someone else to do the job, how to tell me the job has been done, etc... & to confirm they know that they should be paying NI and tax stuff?

You can download a template for "Contract for services".
I have a copy if you send me your email via PM
You'll need to adjust it to suit though

 

[Fred_the_frog]

Do I need public liability insurance if I am not doing the physical work? If the 'subcontractors' who I employ get the insurance then they are covered, but would they sue me if they did something that caused someone to sue them? (If you get what I mean!)

 

[crosbtmrkt]

anglian home improvements , every last person is self employed and its not your responsibility to make them register just put it writing before you start and get invoices when you finish at the end of each week if they are not paying there taxes that's not your problem.

 

[Talay]

Do I need public liability insurance if I am not doing the physical work? If the 'subcontractors' who I employ get the insurance then they are covered, but would they sue me if they did something that caused someone to sue them? (If you get what I mean!)

It costs buttons, why would you not have it ?

 

[Fred_the_frog]

It costs buttons, why would you not have it ?

Because I only have half a button.

I'm joking, I was just asking if I needed it :redface: