Five Ways To Avoid Accidentally Taking Someone On As An Employee!
Be it volunteers, self-employed contractors or workers - are you sure they are not employees?!
Employment status is in the news more than ever at the moment and the message coming out of the case law is it’s not safe to assume that just because you have agreed a status other than “employee” with your new colleague, that that is necessarily the case.
The Courts have made it clear that, to a very large extent, they see employment status as a factual position and therefore, in order to determine whether an individual is an employee, worker or self-employed, they look at the facts behind the paperwork.
So, what do you need to know when taking on someone new to work for you in any capacity? Here are some points to consider.
Control and Obligation: Employers will have exclusive control over an employee during the hours they are contracted to work for them and can direct what they should be doing during that time. The same is usually true of a worker, once they have agreed to do the work. (A crucial difference between an employee and a worker is that an employee is obligated to work during the times agreed in their employment contract, while a worker has no such “mutually agreed working times” and has the option to turn down work when it is offered to them). A truly self-employed individual will have more autonomy over their working hours and over the way they carry out work for you.
Pay: Employees expect to be paid a salary, usually on the same date each month, with their taxes and NI contributions settled for them through PAYE, the same is often true for workers (although in some cases it is possible for a worker to be self-employed for tax purposes). A self-employed person should provide you with invoices before they are paid and will be responsible for payment of their own taxes. A volunteer shouldn’t receive any pay at all, not even agreed general amounts to cover expenses. They should only be repaid exactly what they have spent as expenses.
Substitute: Self-employed individuals should be able to offer a substitute who could work for you in their place. It’s not enough for this simply to be included in the terms of an agreement with them. You need to be able to show that this clause has either been relied on or, if it hasn’t, that you would be happy to accept a substitute. If that is not the case, there is a stronger chance the individual will be classed by a Court as a worker, which means they would share many of the same employment law rights as an employee.
Agreement: To support your position on the status of the person you have engaged to do work for you, make sure your paperwork reflects your intentions. Employees should have a written employment contract, workers should have a contract specifying that they are not an employee, self-employed service providers should have a consultancy agreement and volunteers should have a letter confirming they are not an employee or worker and highlighting that they are unpaid and have agreed to work on a voluntary basis.
Clarity: The easier it is for you to show a path that logically follows from the written agreement you have in place to the way the individual is involved with your business, the more likely it is that you will be able to prove the employment status is the one you envisaged at the outset of the working relationship. Working arrangements can mature and change over time. In order to protect your business it is important that you keep an eye on the way the individual is involved to ensure that it stays in line with your original intentions. If the working arrangement has changed, perhaps it’s time to have a chat with the individual about bringing their terms up to date.
Employment status has the potential to be a minefield. In practice it can be very hard to create a working relationship that falls neatly and squarely into a particular employment status and care needs to be taken to ensure that the elements of the relationship that are within your control are managed in a way to reflect the working arrangement you set out to achieve.
If you would like assistance establishing the employment status of your workforce or with drafting agreements that will reflect the true relationship between an individual and your business I’d be happy to help.
