Before offering a contract to a potential member of staff you need to think carefully about whether under the terms of that contract the member of staff will be an employee, a worker or be self-employed. There is a significant difference between each.
Employees benefit the most legal protection, for example, they have the right not to be unfairly dismissed, they will automatically transfer to any purchaser of their employer’s business (under TUPE) and they are entitled to receive a statutory redundancy payment.
Workers have less employment rights but still benefit from the right to be paid the minimum wage and the requirement to comply with the working time regulations. They also benefit from protection against unlawful deduction from wages and the right to contribution from their employer under the auto-enrolment scheme.
If you want someone to carry out tasks for you but also wish for them to remain self-employed, you will need to provide them with a contract for services, rather than a contract of service. Some benefits to this for you as the employer is that the individual will only have limited statutory employment protection and they pay their own tax and national insurance.
“Gig Economy” is a term that is used to describe the increasingly popular task-based employment. This means that individuals will be paid one-off payments for the individual tasks they do rather than receive a full time employment contract and be paid an annual salary.
When individuals are engaged by companies on flexible, ad-hoc, temporary contracts it can be difficult to determine their employment status. The most common and well-known examples of this are workers that are employed by Pimlico Plumbers and Uber.
To avoid any potential arguments in the future in relation to a member of staff’s employment status, be sure to obtain advice as to the terms which you are incorporating into their contracts.