Should your New Worker be Employed or Self Employed?
Getting it wrong can result in substantial penalties getting it right at the outset will save a lot of time trouble. Current cases involving Uber drivers and bicycle couriers in London highlight issues.
To determine the status, consider if the individual is engaged under a contract for service or services. To summarise the issues to support self employed status the contractor:
- Will provide services but may subcontract work
- Is free to accept or turn down work. The engager is under no obligation to offer any or further work
- Is likely to be in control of pace of work
- May subcontract work or bring in assistance
- Will normally supply all small tools and bring in or hire plant
- Quote on a job by job basis must rectify faults in own time
- Can profit from work done
- Can accept a fixed term contract
- Has no additional responsibilities or privileges although present on company premises
- Gains no employee benefits
- Can terminate if either side is in breach
To support employee status:
- Only provides personal service
- Employer is obliged to offer work and the employee is obliged to do as employer requires.
- Employer may control what how and when work is done
- Employee has no right of substitution
- Employer will provide plant and machinery
- Paid whatever work is done benefits from minimum wage and holiday entitlement.
- Employee can only benefit Only under a bonus scheme
- Employee is hired on a Open ended agreement
- Capable of being promoted
- Can participate in pension scheme sick pay and enjoy family friendly policies
- Employee must normally give notice to terminate agreement
Other factors to support a self employed subcontractor
- Has other full time employees
- Rent workspace from 3rd party
- Has a website
- Has other clients
- Does his own billing