Employing self-employed staff

09 July 2019

When employing self-employed staff, it’s important to remember that they’re not being directly employed by you.

They may be carrying on their own business or providing their services through a third party, but they’re not employees, and they shouldn’t be treated like they are.

A sole trader employing self-employed staff is therefore, strictly speaking, engaging their services, not employing them. like they would for somebody they take on directly as an employee or worker.

This should be reflected in the contract for self-employed staff, which will be a commercial contract for services.

Clearly, using self-employed staff is not as straightforward as it first seems. By employing staff on a self-employed basis you’re making them responsible for:

  • Their own tax, and insurance.
  • Providing or replacing equipment needed for the work.
  • Sourcing a replacement if they can’t work.
  • How, and to an extent, when they work.

They’re not entitled to the same rights as employees or workers, such as holiday pay, minimum wage, or sick pay.

Because of this, the law makes a strict distinction between employed and self-employed, and will come down strongly where the wrong contract has been used.

This could result in claims for wages, holiday pay, or even unfair dismissal, if they worked for you for long enough.

Do you need employers liability insurance for self-employed staff?

No, as long as they’re a bona fide self-employed person. They’ll be responsible for sorting their own insurance out, but you should confirm that they’ve done this when hiring self-employed staff.

How do I pay self-employed staff?

The rules for paying self-employed staff are different to with your employees. They should invoice you for the work completed, rather than being added to your payroll.

The amount that you pay them will be down to whatever agreement you’ve made with the individual, as it is not subject to any legal minimums.

Dismissing self-employed staff

When it comes to dismissing self-employed staff it’s going to be different than with your employees.

Again, for this the starting point is the agreement you have made with the individual, as the contract should contain a termination clause, which should be adhered to.

Alternatively reasonable notice will need to be agreed between the parties, in order to bring the agreement to the end.

Failure to come to an agreement under the clause won’t land you in an employment tribunal, but it could put you in front of a small claims court, or other civil court. As this falls outside employment law, specialist advice is recommended.

Expert support on employment contracts with Peninsula

There are many benefits to hiring self-employed workers, but it’s very different to hiring employees. And there’s lots of ways it can go wrong.

Issuing the wrong contract, or not meeting the requirements for self-employed staff can have serious consequences.

Get help from the expert team at Peninsula. We can draft clear contracts for all of your staff, and review your policies to help prevent legal issues.

And if you’re not yet a client, you can still enjoy a free advice call from one of our business experts. Simply call us on 0800 028 2420.

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