Q: Is it more advantageous to use a self-employed person to carry out a project rather than someone on my own books?
Dec 02 2009
Answered by: Peter Done Ask a question
Firstly, it is important to recognise that the employment status of an individual, whether they are categorised as self-employed, an ‘employee’ or a ‘worker’ is a highly contentious issue and employment tribunals have never really been able to give a consistent answer on the question of employment status.
There are, however, some distinct differences between the rights and obligations of self-employed individuals and employees and this may influence your decision.
Legislation provides employees with a raft of employment rights that are not available to truly self employed individuals so if you take on an employee, you may well find yourself being very familiar with the following: the right to claim unfair dismissal; redundancy pay; various rights in relation to a family life e.g. maternity/paternity leave and pay; right to request flexible working, statutory sick pay, disciplinary procedures, to name but a few. An employer is also bound by statutory procedures in relation to employees in certain situations, for example when retiring someone. Not making these entitlements available to employees may well land you in trouble in an employment tribunal.
Typical treatment of employees includes paying a wage at regular intervals, deducting PAYE and NI, as well as dictating their hours of work, days of work, and control over how work is completed, and when they have time off.
An employment relationship also binds employees to certain obligations in relation to their work with you, which you have the right to rely on, and take action on if these obligations are breached.
Most employment rights are not available to self-employed individuals therefore they are not entitled to statutory sick pay, or to be afforded a disciplinary procedure when something starts to go wrong. Your control over how and when the work is done is very restricted, and truly self-employed individuals can typically have a substitute do the work if they cannot attend for some reason. Typical self-employed individuals can determine when they take holidays, and do not have to ask your permission. You may pay them an agreed figure, rather than a wage, and this will be paid gross.
While your rein over a self-employed individual is relatively slack, you will not have the added concern of employment rights and potential recourse at tribunal that is coupled with someone who is employed by you, if you act unlawfully in relation to their employment.
Lines are often blurred between categories of employment status and you must be careful that your behaviour and actions towards the individual are consistent with the ‘label’ you give the individual, as well as the intention of the employment relationship at the start.
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