Pro's & Cons of hiring self employed people

[RightGlobalGroup]

Hi,

I am expanding my business and interested to know the pros and cons of hiring a self employed person rather than actually hiring them to be an employee.

Thanks guys

 

[Picture Bute]

You could Google 'IR35' for a starting point....

 

[RightGlobalGroup]

You could Google 'IR35' for a starting point....

Yes just looking at first hand personal experience

 

[WaveJumper]

I was reading through this at the weekend might be of interest:
https://www.cipd.co.uk/Images/self-employed-contractors-guide-web_tcm18-70390.pdf

 

[Financial-Modeller]

Massively dependent on whether the person aspires to be permanently employed or not.

c.f. somebody who is out of work, and takes a full-time temp role on a 'self-employed' basis, with the aim of rejoining the workforce, against a professional contractor, choosing to operate outside IR35, who is happy to provide a service to your organisation on part of the time basis until the project is complete.

 

[RightGlobalGroup]

Massively dependent on whether the person aspires to be permanently employed or not.

c.f. somebody who is out of work, and takes a full-time temp role on a 'self-employed' basis, with the aim of rejoining the workforce, against a professional contractor, choosing to operate outside IR35, who is happy to provide a service to your organisation on part of the time basis until the project is complete.

Thank you for the response the person doesn't intend to become a permanent member of staff and wants to still do other things too which we are happy with.

We also want to use them as and when if possible

 

[Mark T Jones]

Pro: no commitment required

Con: no commitment required

 

[simon field]

We also want to use them as and when if possible

And what happens if they’re busy doing something else for a couple of months?

 

[MBE2017]

A self employed person can be a real boon, or a complete hinderance. A lot will depend on your expectations, of their reliability, availability etc, not that much difference to an employed person, the two main differences being you cannot order them around as easily as an employees, but you can engage them only when it suits you both.

I have used professional self employed sales staff, who are the hardest workers I know. They are motivated to do well, understanding no results means they starve, but with a lot of monitoring they can sell ethically as well. Either way, it’s a lot of work. The main reason I used self employed sales is they were the best, and earned up to double what an average salesperson would do, often only working 2/3 days a week.

 

[paulears]

It depends what your business actually is? With me, in entertainment, it's a very sensible way to do things. I have a contract and in it is detailed (for example) all the things a particular incoming show want. Usually it will be lights, sound, stage management, but sometimes video gets added and then quite specific things like roving audience technical folk with microphones on booms. Self-employed people and the requirements of independent work fit very well. So I'll find maybe three lighting people - send them that part of the technical spec, same with the others and ask if they are free on X day, at Y time to do Z role at a certain price. They turn up - the show arrives and they get on with it. Everyone does their own role, based on their experience. I coordinate and arbitrate if there are problems. Employees would not be useful at all. I don't have the time to train bank canvasses. It means dealing with clients who have surplus bar staff who they offer to make up numbers if I'm struggling - but these people are no use to me and need supervision at the very least and if I had time to supervise I could have done it myself. The only cons are the cost - a self-employed person is more expensive. Take somebodies day rate, and often subsistence payments to cover food, travel and accommodation make them very expensive. If there was sufficient continuous work employment would be cheaper, but few people have enough of a skill base to make this easy.

 

[Newchodge]

Will you be breaking the law by using them as self employed when they are , legally employees?

 

[Newchodge]

To put it another way, you and they do not have the right to choose whether they are self employed. That is a legal fact.

 

[MyAccountantOnline]

Hi,

I am expanding my business and interested to know the pros and cons of hiring a self employed person rather than actually hiring them to be an employee.

Thanks guys

You cant decide to make a member of staff self employed.

Whether they are employed or self employed depends on the facts.

Generally if you are offering a job and deciding what they do, how and when they do it, and what they are paid they are employed.

If you've not yet come across it this might be helpful
Check employment status for tax - GOV.UK (www.gov.uk)

Getting employment status wrong is expensive you could end up with with a bill for back-dated tax, NIC and penalties. Professional advice is highly recommended.

 

[Nexilis HR Solutions]

If you are taking on someone self-employed then they are working in the capacity of a consultant/contractor who is providing you a service. This would mean that either you or them would set up a contractor agreement/contract setting out the terms of the agreement and services provided. They are then obligated to deliver for you otherwise they are in breach of the contract. Positives are that it takes away the pain of running payroll, tax and NI contributions, pension provisioning etc. The biggest risk is as someone mentioned the recent changes to IR35, probably best to seek advice on this from an employment law perspective and also an accountancy perspective incase you get tied up in knots with it.

 

[JEREMY HAWKE]

What is the reason for you not wishing to employ somebody ?

 

[Mr D]

I've done (and likely will do in the future) self employed work.

I charge a rate far higher than an employee's wage as I have to factor in stuff the company won't pay for.

Say you want an employee at £12 an hour, I'd be charging you £180 for a 7.5 hour day. You don't pay sick pay, pension, travel, equipment, clothing or anything else unless I bill you for it.

Your employee comes in at 9am and stays till 5pm. I'd be coming in sometime in the morning and may go at 3, may go at 6. Maybe even work from home a few days in a row or take a few days away.

If you want control, get an employee. You can manage them differently, you can require them to turn up at a particular time, you can also insist they turn up.

Self employed could send a replacement person - say I book a plumber named Andy. He decides he's too busy that day and sends Tom - I don't get a say in the matter as I'm contracting with Andy, not employing him.

It really isn't your choice about whether you employ or contract with someone. It comes down to the circumstances.

Oh and if years later they claim they were actually an employee but you paid them and treated them as self employed, better be prepared to back up your classification of them. A few times people have won considerable financial awards of unpaid leave etc from what turns out to be their employer who had them on the cheap.

 

[paulears]

I'm in a room with 11 people at the moment. 4 are employees, paid by PAYE, and the rest self-employed. I need their skills, their status (to me) is unimportant - Out of the self-employed, two receive fees based on union agreements, the others whatever they could negotiate individually. Some of the PAYE people also have union agreed rates. This system causes no grief with the people and I actually don't even have to think of their status at all. Three submit invoices for the total amount and if they're sick, they still get paid. The others I have a form for - pay, or not pay - their contracts cope with either choice.

 

[Mr D]

Thank you for the response the person doesn't intend to become a permanent member of staff and wants to still do other things too which we are happy with.

We also want to use them as and when if possible

Employers often do that with zero hours contracts.

Disadvantage is if you don't book the person up they may be busy with something else. So when you need them they are not available.