Do You Need To Issue A Contract Of Employment?

I wish there were an easy, yes or no answer to this question, but like everything in life, the devil is in the details. With all the red tape nowadays it can get very confusing whether someone is an employee or a sub-contractor.

If they are an employee, do you need to issue a contract of employment? Perhaps you employ a nanny or someone to do your part-time admin? If this is the case, do you know what type of contract they should be on? So many questions! So let’s try and provide some clarity on whether you need to issue a contract of employment or not.

Subcontractor Or Employee?

Yes, the question of whether you need to issue a contract of employment may be a complicated one. Luckily, there are some straightforward tests to determine whether someone is an employee of a subcontractor. There are also some more complex tests, but let’s start simple.

When setting out as a small business owner, it is undoubtedly advantageous to utilise subcontractors to help out when you need to use them. Generally, this may be to carry out some ad-hoc admin or tackle those Facebook, Twitter and Instagram accounts you always mean to get round to. 

What’s The Difference Between A Contractor And An Employee? 

Well, one of the most straightforward tests to determine if someone is an employee or not is if you allow them to work for other people. If they work for other clients, then a subcontractor contract should suffice. The subcontractor contract you give them should state that they are allowed to work for other people. It should contain their rate of pay, together with what happens if something goes awry and they can’t complete a project. Finally, it should also detail that they are responsible for any taxes and NI payments.
However, this one single criterion doesn’t mean that just because you allow someone to work for other people, you are fine. It’s just a good, initial understanding. You can read more here.

Terry’s My Mate; He Doesn’t Need A Contract of Employment

I know, I know! I can hear you shouting from here: “It’s alright, Terry’s my mate, and I’ve known him for years!” But beware – these may be your famous last words! What happens when you have a fallout with your mate? What happens if and when Terry works out that you haven’t been following employment law? It is a lot easier to get your mate to sign a contract from the off. It may seem much more formal, but having some form of contract of employment from the beginning keeps everything transparent.

What If I Already Employ Someone?

 If you already employ someone you believe to be a subcontractor, what should you do? My first recommendation would be to check out the HRMC Status Checker. This is an entirely anonymous service which will tell you if you are an employee or a contractor.

How Can We Help You?

Here at Kate Underwood HR, we understand that, as the boss of a small business, you’re probably always spinning a lot of plates. Time is your most precious commodities, and this is precisely the reason you need an HR professional like me to help make sure you stay legal. If you don’t currently have the correct documentation in place, such as a contract of employment, I can assist with looking after you… and your mate!
If you have any questions about whether you should issue a contract of employment, please feel free to give me a call. I’d be more than happy to help.
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