Self employed staff

Kikiburf

Hello,

Need some advice regarding the lady who works for me... or with me!

So i am a sole trader and have been for 3 years, in Jan this year i had so much work that i 'hired' a self employed lady to work alongside me. I provide her all the work and invoice the customers with my price and then she invoices me at the end of the month which i then pay. I do make a profit off of this.

Is what im doing legal? She only works for me as she doesnt want to work for anyone else and she does have a say when she does and doesnt want to work. She has chosen to be self employed and not 'employed'. The rota is there just for ease really. We do have a contract that explains that she is in charge of her paying her NI and tax and that she knows she is self employed

Im just a bit worried as i have read a few forums on here saying that i should register as an employer. Is this right?

Help! Dont want to be penalised by HMRC for my ignorance.

Thanks :-)

Savvy_Sue

Work through the employment status questionnaire provided by HMRC here and see what you think.

System

Basically if you're telling her how to do the job as a manager would an employee or she can't send in someone else to do the work and has to do it herself then no she's not self employed.

Also how much are you paying her? NMW actually costs an employer not just the £7.83/hr but employers NI, 10.7% which constitutes statutory holiday pay as well as 2% employers workplace pension contribution so you're looking at roughly 26% more than the hourly rate in employers costs. Anything less than roughly £9-£9.90/hr depending on the amount per week and she's effectively getting less than minimum wage.

Marcon

Tarambor wrote: »

Anything less than roughly £9-£9.90/hr depending on the amount per week and she's effectively getting less than minimum wage.

If she's genuinely self employed and happy with that rate, it doesn't matter. NMW doesn't apply to self employment.

trailingspouse

From the sound of it you have sub-contracted some of the work to this person.

Things to look out for - do you provide any equipment she might need, or does she provide her own? Do you have a contract (and was the contract drawn up with an eye on IR35)?Does she have a right of substitution (could she send someone else to do the work if she was unable to)? Can she just announce that she's unable to work tomorrow, or next week, without having to book leave? Does she look after her own tax and NI? Does she still get paid if she's off sick? None of these are conclusive, but taken together they build a picture of the relationship.

Using a phrase like 'works for me' makes it sound like, deep down, you know she's an employee really.

At the end of the day, even if both of you are convinced that she is self-employed, the final decision rests with HMRC.