HR Zone have an interesting blog post today about the business risks in using self employed contractors in a way that could result in either HMRC or an employment tribunal deciding that they are in fact employees.
We have been talking about this issue in our 4sights at 4Networking meetings & advising clients of this for a long time. It isn’t as simple as it first seems and it isn’t a mistake you want to make as the outcome can be costly with backdated tax & NI contributions as well as statutory paymets to the inividual such as holiday pay and SSP.
Whilst a Contract for Service outlining the working relationship is a good start point, what will also come under scrutiny is how that working relationship operates in practice.
So if you use contractors make sure that the way they work for you is genuinely in the capacity of a self employed contractor – a good start point, although not necessarily the whole answer is to check out the HMRC websites for their tests of genuine self employment.
Then once you have estabilshed that you are using contractors correctly ensure that you have a robust Contract for Service to back up how that relationship operates.