Family members help out from time to time, some casual workers, some freelancers, even interns and apprentices. Some businesses never get out of the ‘freelance’ mode and take on employed staff. Some employ people and carry on with a mix. Very few end up with employed staff only as a business model.
Entrepreneurs cite fear of employment law as one of their key concerns – yet few seem to realise some simple facts:
- Calling someone freelance or self employed does not mean they are (we might have thought of that one ourselves if it really worked!)
- Self employment does not mean no tax has to be deducted under IR35
- Employment tribunals can decide your people are really employed (and trigger claims from the revenue for back tax)
- Genuine freelance workers have a full range of discrimination and other employment rights (the main thing they don’t have is unfair dismissal rights)
It can be tempting to take on people as freelance workers and not have to worry about PAYE and tax at the end of the month, but it can mean that you are storing up trouble for the future. Sometimes it can be better to pay the tax as you go and know you don’t owe the revenue anything later.
New employees have two years before they qualify for unfair dismissal rights, and for some people it can be less worry to take on staff if the work needs to be done regularly or on an ongoing basis. You really should talk to your accountants about this and tell them honestly how you are working.
Even if freelance workers are the right model for you, you need a proper agreement that not only sets out the relationship so HMRC can see it is not an employment relationship but also deals with:
- Who owns copyright – the default is that they will if they are not an employee
- Confidentiality and data protection
- What happens about confidential information when the contract ends
- How they will deal with sending suitably qualified substitutes when they are not available……because if they can’t that may be one indicator that they are not self employed
- What equipment they are going to provide
And there’s more……
There are lots of things the law gives you automatically if you are the boss of an employee that you are going to have to contract for if you are using freelance workers. We come across people who don’t have copyright in their own web sites, who don’t have access to social media followers they paid someone to find and worse.
Ultimately you are in business to get particular things done at a profit. Setting out proper arrangements to manage freelance workers (and staff) are part of the building blocks of that success. Join us for a free teleseminar to discuss managing freelance workers – register via this link.
Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.