smallbusiness.co.uk: Helping your business think big

First to sort out the relationship and terminology; it is always a good idea, essential even, to have the contractual relationship between oneself and another party in writing - hopefully then there are no arguments to what was agreed.

Someone who is genuinely self-employed has a “contract for service” with the contractor. If you were ever to be investigated by HM Revenue and Customs the first document they ask to see is the Contract for Service. If there isn’t one, then they will proceed on the basis that the relationship between the two parties is based on a Contract of Service, i.e. an employment relationship. It would therefore be very prudent that you put in place the proper documentation ASAP. Remember also that HMRC will not accept documentation at face value- they will satisfy themselves that it really does reflect the true situation.

An individual sent to you from an agency (strictly speaking I think you are talking about an Employment Business rather than an Employment Agency) has to have a contractual relationship somewhere. Most frequently that is an employment one with the Employment Business or possibly as a genuinely self-employed person. (A “worker” in this situation is always self-employed but has contracted personally to perform the task.)

Since the individual is likely to be employed by the Employment Business (as you refer to them as “employed by the Agency”) is not likely to be “employed” by you on a self-employed basis since you are presumably paying the Employment Business a fee for the use of their employee’s services. (I suppose the “Agency” could simply be acting in a capacity to find commercial contract opportunities as an introducer of some kind but I do not read this from your question.)

The primary responsibility for insurance would therefore sit with their employer, the Employment Business. That responsibility extends to and includes amongst other things, that their employee is not harassed or discriminated against whilst working on your site(s) and that you and the Employment Business both have responsibilities under health and safety- both for example should have carried out risk assessments.

Both of you should have employers’ liability insurance and insurance should extend to covering visitors, suppliers, customers and contractors working on or visiting your site(s). Any claim for an injury or accident would then prove quite interesting as to who pays up! Clear contractual terms between all the various parties involved would greatly assist the ultimate resolution of any problem.