Self employed worker or being an employee
It is up to an employer to decide who is an employee and who is self employed but there are rules.
- 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.
- 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:
- Do you tell the person how to do the job?
- Are you paying a regular weekly or monthly fee?
- Do you provide expertise and support to the person?
- Do you provide regular hours?
- 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