Moving staff from self employed to employed

Discussion in 'Employment & HR' started by Redd, Feb 28, 2018.

  1. Redd

    Redd UKBF Regular Free Member

    129 9
    Hi Guys, looking for some help here, I run a landscaping business and we currently have 2/3 sometimes 4 teams, we have went through a few teams over the 5 years however we now have 2 pretty stable teams (others are a bit unreliable at times so wouldn't consider them at this moment)

    I am currently paying their CIS return @ 20% each week on there wages which are approx £500 after deductions per week (fitters rate)

    I am now at a point where I'd like to take these two teams on the books (before HMRC tell me to do so) however they are on a very good sub contractor rate and whilst I am happy to pay this, I really dont want to be paying this rate at 5.6 weeks holiday pay?

    Is there a way I can lesson this? 5.6 weeks per team would cripple me! could I drop there wage to say £400 per week and top it up to £500 by using some holiday pay for example, ideally I would like to reward them over xmas and new year with holiday pay and even perhaps give them a week in summer which would total 3 weeks but I can't go to 5.6 weeks

    I hope that makes sense, the reason for the question is they just wouldn't accept it if I said your down to £400 but I'll give you holiday pay for 5 weeks in July and December for example, I know my guys and they wouldn't see it long term, they would see it as there wages are being deducted by £100 weekly.

    Thanks in advance
     
    Posted: Feb 28, 2018 By: Redd Member since: May 4, 2013
    #1
  2. Ashley_Price

    Ashley_Price UKBF Legend Full Member - Verified Business

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    I think you'd be best off speaking to your accountant on this, s/he will be able to advise you based on your own circumstances.
     
    Posted: Feb 28, 2018 By: Ashley_Price Member since: Feb 9, 2008
    #2
  3. STDFR33

    STDFR33 UKBF Big Shot Free Member

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    You can offer them a contract of employment at whatever rate you think is fair. They don’t have to accept it of course.

    If you employ them, you’ll need to pay them holiday pay. They will also be entitled to a pension, and other things such as sick pay, paternity etc.

    You will also need to get employers liability insurance.

    You need to get their employment status right. You can’t choose which bits of the law you want to comply with.
     
    Posted: Feb 28, 2018 By: STDFR33 Member since: Aug 7, 2016
    #3
  4. Newchodge

    Newchodge UKBF Big Shot Free Member

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    You MUST pay them for 5.6 weeks holiday. The rate you pay for a week's holiday must be, at least, the average weekly pay over the 12 weeks prior to their taking the leave. You can choose to insist that they take the 8 public bank holidays as part of their paid holiday entitlement, leaving 4 weeks to be taken when they request it.

    Their normal pay rate can be whatever you agree with them. They will pay tax and NI on that and you will pay 13.2 % employers' NI, after you have used up your £3,000 NI allowance for the year.

    As stated above, they will also be entitled to auto-enrolment pensions and statutory pay - sick pay, maternity/paternity etc.

    Hope that helps.
     
    Posted: Feb 28, 2018 By: Newchodge Member since: Nov 8, 2012
    #4
  5. Redd

    Redd UKBF Regular Free Member

    129 9
    Hi Newchodge, thanks for your help, I have spoken with accountant who reckons this is fine to top up there wages this way although now you mention it how can that be if I have to give them an average of last 12 weeks? which will be at £500 as a pose to the £400 I would want their "actual" wage to be?
     
    Posted: Feb 28, 2018 By: Redd Member since: May 4, 2013
    #5
  6. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Accountants tend to know more about accounting and finance than they do about employment law (with apologies to all accountants on here who do understand it).

    I am about to go to the employment tribunal with a client who agreed with his employees that he would include their holiday pay in their wages (known as rolled up holiday pay, and against the rules) rather than pay it as and when they took holidays. After a year his 2 employees have left and are demanding their holiday pay. His potential liability for 1 year for 2 employees is over £3,000.
     
    Posted: Feb 28, 2018 By: Newchodge Member since: Nov 8, 2012
    #6
  7. Mr D

    Mr D UKBF Legend Free Member

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    Indeed. Can see why they would see it that way. Would see it their way myself.

    Don't forget you paying them £400 or 500 a week you have employers NI to pay on top (to HMRC) and if the staff join the pension scheme you get to contribute towards that too on top of the pay.

    The 28 days annual leave is the legal minimum, been that way for employees for a number of years.
    If your staff are going to be employees now were they employees in reality before, just you paid them as self employed?
     
    Posted: Feb 28, 2018 By: Mr D Member since: Feb 12, 2017
    #7
  8. Redd

    Redd UKBF Regular Free Member

    129 9
    Thanks Cyndy, Hi Mr D, well yeah they were kind of although its never been permanent and has always been pretty sporadic, construction workers are extremely hard to manage 9hence the reason for this move) and will work 1-6 months with you in winter, then a friend of a friend asks them to do there garden/driveway and there away doing there own thing for a month, then a competitor offers them a better rate and they go there then come back after realising its ok here, then they take the huff and walk off jobs halfway through because I'm complaining about them being late etc etc....the list is endless.

    the two teams I now have have been sporadic but I think there sporadic because they can be, I think if we got contacts in place etc they would knuckle down
     
    Posted: Feb 28, 2018 By: Redd Member since: May 4, 2013
    #8
  9. Redd

    Redd UKBF Regular Free Member

    129 9
    one of the 2 fitters has worked with me and me only for over a year non stop, I am aware HMRC will not like this which is another reason why I need to do something if I want to keep him which I do
     
    Posted: Feb 28, 2018 By: Redd Member since: May 4, 2013
    #9
  10. STDFR33

    STDFR33 UKBF Big Shot Free Member

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    Agreed.

    The OP needs a HR professional like yourself to navigate the minefield that is employment law.
     
    Posted: Feb 28, 2018 By: STDFR33 Member since: Aug 7, 2016
    #10
  11. Redd

    Redd UKBF Regular Free Member

    129 9
    with regards to the N.I and Pension scheme etc I am aware and will happily contribute to this for them, I am keen to help them knuckle down and have a proper job with proper regular pay and holiday pay etc however 5.6 weeks would cripple the business. its just not possible unless they take a pay cut from there weekly wage....bare in mind at present they get paid zero when on any holidays inc xmas as sub contractors
     
    Posted: Feb 28, 2018 By: Redd Member since: May 4, 2013
    #11
  12. Mr D

    Mr D UKBF Legend Free Member

    9,050 915

    Its the minimum possible.
    Oh and you don't contribute to the employer NI, you pay that in full.
     
    Posted: Feb 28, 2018 By: Mr D Member since: Feb 12, 2017
    #12
  13. Redd

    Redd UKBF Regular Free Member

    129 9
    worded that wrong, I will pay in full! I think I'm just going to have to continue alternating amongst our list of sub contractors, 5.6 just ain't viable, not just financially but I just can't be without 3 teams for 6 weeks of the year.
     
    Posted: Feb 28, 2018 By: Redd Member since: May 4, 2013
    #13
  14. STDFR33

    STDFR33 UKBF Big Shot Free Member

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    It won't be viable if / when HMRC deem these workers to be employees, and you are lumbered with paying any 'lost tax', as well as back dated holiday pay, along with the penalties and interest.

    As I said in my first post, this is not about choice. You must get the employment status right.
     
    Posted: Feb 28, 2018 By: STDFR33 Member since: Aug 7, 2016
    #14
  15. Redd

    Redd UKBF Regular Free Member

    129 9
    yeah I think your making HMRC out to be a lot scarier than they actually true, not sure if your playing devils advocate here or scaremongering due to you being in a position whereby you know more than I do. your advice is appreciated but not so much your scaremongering, if your so good at your job and so in the know how about coming back with a solution instead of a problem?
     
    Posted: Feb 28, 2018 By: Redd Member since: May 4, 2013
    #15
  16. STDFR33

    STDFR33 UKBF Big Shot Free Member

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    I've no need to scaremonger. I don't know who you are, and frankly I don't give a toss about you or your business.

    But there's lots of case law in this area and HMRC are far from afraid of challenging employment status.
     
    Posted: Feb 28, 2018 By: STDFR33 Member since: Aug 7, 2016
    #16
  17. Mr D

    Mr D UKBF Legend Free Member

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    Agreed.

    The business does not get to decide if its staff are employees, workers or self employed.
    There has been one case recently http://www.bbc.co.uk/news/business-42164201
    Could the OP cope with back claims for holiday and other employee benefits?

    https://www.boltburdon.co.uk/yourbusiness/employment-2/employee-worker-self-employed/
     
    Posted: Feb 28, 2018 By: Mr D Member since: Feb 12, 2017
    #17
  18. STDFR33

    STDFR33 UKBF Big Shot Free Member

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    Posted: Feb 28, 2018 By: STDFR33 Member since: Aug 7, 2016
    #18
  19. Mr D

    Mr D UKBF Legend Free Member

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    You have been given solution, you just say its unaffordable.
     
    Posted: Feb 28, 2018 By: Mr D Member since: Feb 12, 2017
    #19
  20. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Unfortunately, there is a problem. If you cannot afford to pay your staff, or to operate when they take their holidays, your business model is the problem.

    HMRC is looking more and more closely at 'self employed' employees. From your description of your staff working for you for a while, then for someone else, then drifting back to you and away again, they may currently be self employed. Whether they really are will depend on the fine detail.
     
    Posted: Feb 28, 2018 By: Newchodge Member since: Nov 8, 2012
    #20