help plz. new start up having trouble with employment law surrounding wages

roamingandy_2

thanx everyone, i'm still divided between self-employment and a profit sharing, "probably paid internship" but it has been very helpful to narrow the options down.

self employment would be great as it would offer the option of claiming tax credits so they would be guaranteed some money what ever happens, unfortunately i've read that this normally takes between 6-8 weeks to apply for.

as an internship i believe i would be able to offer more than most i see advertised, as i would be supporting graduates using exactly the skills they want to gain experience in, it would be flexible and they would be (practically) guaranteed a great reference.

@ Horace, i am very aware that internships atm are often used to exploit young people but as i say i think i could offer them good experience in a fun environment, and i think that if everryone involved incl me shares the profits equally then i wouldnt feel like i was exploiting anyone.. even if we dont earn any money.

thanx all very much for your help. Andy

roamingandy_2

update: if anyone else is interested further research into internships suggest that if i want to keep the relationship as an internship keeping it down to a short period (say 2 weeks) is the best way, unless they are not actually working but only shadowing employees.

i thought this might be especially useful info for young people on internships, basically if they are doing actual work for a company they legally become employees very quickly.

i need to do more research but at the moment i'm planning to offer a 2 week profit sharing internship and at the end of it we can discuss whether i can afford to offer a wage or, having had experience of what we are doing if they want to continue on a self-employed basis.

Savvy_Sue

roamingandy wrote: »

self employment would be great as it would offer the option of claiming tax credits so they would be guaranteed some money what ever happens, unfortunately i've read that this normally takes between 6-8 weeks to apply for.

Again, I could be wrong, but I thought there were plans to change assumptions about income for the self-employed. Historically it's been OK to pay yourself next to nothing and still claim various things, but I'm sure I've heard rumours that at some point in the future that's going to change to an assumption that you're making at least NMW in your self-employment. While it might not affect tax credits, it could well affect other things if you find people are working more hours than they can be paid for.

Plus, I say again, I do not see how these CAN be self-employed positions: you want these people - only these people and not their best mates if they fancy a day off - to work to your direction. Work through the ESI guide here and see what you think, but remember this is not YOUR decision, it is HMRC's, and if you get this wrong and make these people self-employed when they are not it will be YOU paying the penalty.

Also note what Horace says:

Horace wrote: »

If your events are free for the community then you won't make any money at all.

It's also worth noting that there is some evidence to suggest that people value things more if they have paid for them, even if it's a notional amount.

Horace wrote: »

One thing though - don't exploit people.

CKhalvashi

roamingandy wrote: »

update: if anyone else is interested further research into internships suggest that if i want to keep the relationship as an internship keeping it down to a short period (say 2 weeks) is the best way, unless they are not actually working but only shadowing employees.

i thought this might be especially useful info for young people on internships, basically if they are doing actual work for a company they legally become employees very quickly.

i need to do more research but at the moment i'm planning to offer a 2 week profit sharing internship and at the end of it we can discuss whether i can afford to offer a wage or, having had experience of what we are doing if they want to continue on a self-employed basis.

These can’t be self-employed positions.

Another option is to offer a minimum wage, with a departmental profit-sharing at the end of the year. This enables you to keep your money in the company for essentials, whilst giving your staff an opportunity to get off their backsides and work.

We have staff that are officially on salaries around the £40k mark, but quickly get worked up to 6-fig land, whilst making me quite a substantial income, by bonus’ing them on a %age scale (in our case 12.5%) any work they bring in.

£40k + 12.5% of a further £250k is worth sniffing at, and that’s only the beginning! Our average staff:turnover ratio is 1:£691467.68 in the 2010/11 tax year. I’ve just gone through the company archives on my lappy to find that.

CK

Mistral001

The OP needs to get this all sorted out. Taking on people and just "hoping" to pay them minimum wage is not good enough. You must pay them the minimum wage or you could be taken to court. Taking on employees is a responsibility. You have a responsibility to them as people, so get yourself organised and make sure that if you do take them on that you will have the funds to pay them.

Internships have been mentioned. We do live in a society where some poor graduates are tempted to work for nothing just to get get something on their CV. Internships do work and many graduates benefit from them but what will they be learning from this organisation. I think what the OP is wanting really are volunteers as others have mentioned.