Employed or S/employed

[Ian C]

Yes, many should be employed. The HMRC see it as exploitation if you don't employ them. I'm not suggesting you are exploiting him but many are being exploited. There was the lad on here who was getting paid nothing or one day a week at best but had to be available everyday just in case his "boss" felt like working. Thats exploitation.

 

Paye is not that bad. If you have guaranteed work for the guy then it could be ok. Everyone bemoans paying holidays etc but you calculate that into the day rate anyway.

 

So for example if you pay him 70 a day now self employed and he pays his own tax and gets nothing for holidays and he does 47 weeks for you thats £16450 that your are forking out.

 

You PAYE him a salary of £16450 paid over 52 weeks of the year thats £316 a week gross. you then give him 270 ish of that and the balance piad in tax.

 

You are, in theory, no worse off and he is less exploited!

 

Only cost to you is hassle, a little bit of employer contribution to NI, but the killer is keeping him busy on wet days or shortage of work etc.

 

Thanks guys, and thanks RUPE, your workings out make sense and to be honest i want to do the right thing as he is a mate aswell and he NEVER complains even when i cock a quote up and we have to tow our guts out to get in done in time. He is also good with customers and acts in a professional manner and an asset so i dont want to loose him. Looks like a call to HMRC on Monday.

 

Like you said RUPE, the only worry for me is having to keep him going when work is lite.

[dillsue]

Guys, the tests for self employment are quite straight forward and are as follows-

Control- who controls how and when the work is done. If you tell the labourer how and when to do the job you have control and the labourer is employed. If he decides how and when the work is done then that is a strong pointer towards self employment.

 

Substitution- can the labourer send a substitute to do the work in his place. This has to be a genuine right to send a substitute (without asking permission). If the labourer can send a substitute without you objecting then he is definitely self employed. It may be a requirement that the substitute is suitably qualified so not anyone can be sent, but if the right to send a substitute exists then its definitely self employment. If the work has to be done by the labourer himself then thats a strong pointer to employment.

 

Mutuality of obligation!- if there is an obligation for the employer to offer work each day and an obligation for the labourer to turn up each day then thats a strong pointer towards employment. If there is no obligation for the employer to offer work or for the labourer to accept the work then thats a strong indicator of self employment. So if you "hire and fire" depending on the workload and the labourer isnt always available cos he's doing other things or doesnt want to work, then that a strong indicator of self employment.

 

These are the main tests for deciding on employment/self employment status.

 

Other things that have been mentioned such as the provision of tools, PPE, equipment, financial risk, provision of insurance, length of service, working regular hours etc etc are all minor indicators of status.

 

If you and your labourer want the relationship to be self employed then set up your working arrangements to GENUINELY meet the main tests and you'll be laughing.

 

Ignore HMRC "sabre rattling" and google IR35 and Accountax.

[jojam]

I used to think like you I C Trees,so we took on an employee 2 years ago.We parted company this week.I will use subbies from now on,employees cost too much!You'll find that you can't compete on the smaller jobs because your employee takes a fair chunk of the profit.

[Andy Collins]

Another reason HMRC want to see people employed is so they collect more taxes, and NI contributions, and to try and get around employing a person when he should be, may be viewed as tax evasion, not a good place to be!

[Rupe]

Employees should be on less than freelancers/self employed because they have the benefit of job security. If you have enough work they should work out cheaper.

 

Its only when you are low on work or have breakdowns or bad weather that they cost more.

 

The sad fact seems to be that if you have employees you have ot ruthlessly make them work in all weathers to keep the money flowing.

 

That is the one part that I don't agree with. Risk assessing a job means takign in to account the weather and saying no if its too wet/windy. If you can swithc jobs then thats fine but many compaies with employees have work booked out and dates written in stone that they won't change whatever the weather.

 

This contradicts so many safety guidlines that I feel I would prefer not to employ, but if I could and make a go of it I would. I would like the security of knowing someones turning up everyday rather than always phonign round to book the staff in at often short notice and tryhing to fit in with the weather etc. its a pain.

[Steve Bullman]

stick his money up £5 a day and get him to start supplying his own saw etc, jobs a good 'un

[jojam]

We have and have always had plenty work,i don't agree that employees work out cheaper.In the long run for us no,if you purely did tree surgery work where the profit margin is higher then yes this might be the case but firewood and forestry work where the margin is lower, we found it difficult to cover an employee's pay especially when advised by our accuontant to charge 100% more for the employee on a job to cover for all the associated expenses!

[Rupe]

Fair point, different industries etc. 100% is a bit steep though! Might work in some sectors but not forestry etc.

[Hogs Breath]

If your contract with him states minimum hrs then that may save you some on holiday pay ect.All employees p/t and f/t are now entitled to same holidays ect

[Frankie Lawrence]

Our firm is made of 3 employes one of them me as apprentice and 3-4 subbies and have had other ecent subbies who only worked for us but once a wenicallityuk for another firm its all about techinicaillities and loopholes etc.

 

Ive allways said that when the day comes when I star geting my own workas a subbie to just Have one bloke as a subbie and thats it as much as an employee I love paid holidays bank holidays sick pay security and all the other benifits I would hate to be and emplyoer and especially an employe who does Feeling for firewood just to cover wet days and wages it must be a pain in the gonads to say the least