Self employed worker or being an employee

peacockLatest HR Advice

It is up to an employer to decide who is an employee and who is self employed but there are rules.

  1. An employment tribunal could rule that a self-employed person was in fact an employee and therefore confer statutory rights and then determine what contract of employment that person should be on.
  2. HMRC lay down some features that must exist before an employer can decide a person is self-employed. If later, a person is deemed to be an employee all statutory contributions are the liability of the employer including employee tax.

A company registered at Companies House is a separate process and invoices are submitted. These are paid through purchase ledger but if the company only works for one client and the company is a sole trader then there is substantial risk. Better in that example to issue a self-employment contract to be safe.

A self-employed person would not be registered at Companies House but still has to submit invoices. You issue a self-employed contract in the name of an individual.

Criteria to be considered before issuing a self-employed contract:

  1. Do you tell the person how to do the job?
  2. Are you paying a regular weekly or monthly fee?
  3. Do you provide expertise and support to the person?
  4. Do you provide regular hours?
  5. Do you send your own staff in when things go wrong and need rectifying?

If the answer is “No” to all these points then the person is likely to be self-employed.

A self-employed person must of course be kept safe at work. So if a self visits a company site they should receive some advice on Health and Safety and the risks in the building or on site. Where to evacuate to is fundamental in the event of a fire.

It is also advisable to have available a site or office general risk assessment.

Suggested procedure – to show to a Tribunal and HMRC that you have a thoughtful process and managers have considered why a person can be designated a self employed person it is suggested managers fill out a questionnaire and this be kept on record.

For template documents, questionnaire and self-employed contracts contact Peacock HR Consultancy