taking on staff

[cleanermothershelp]

hi im looking for advice regarding taking on self employed cleaning staff for my cleaning business ive looked on business link but it so confusing.

can anyone help , do they need an employment contract ? holiday entitlement , pay etc

thanks

Not if you're taking them on as self-employed. Ideally you'd have a contract with them that would stipulate what work you want them to do and under what terms. There should be no mention of holiday entitlement and it definitely shouldn't be called contract of employment as both of these would mean you treat the cleaners as employees. This would mean you would need to notify HMRC about hiring them, calculate and deduct tax off their pay etc...

There is a real danger of HMRC classifying the cleaners as your employees regardless so you need to make absolutely sure that the contract states they are free to work as they wish, can send substitutes in their place, they'll need to tender for jobs that you offer and, ideally, would have other people they work for as well, etc etc. This link shows the HMRC's approach to employment v self-employment. Please note that getting this wrong can cost the employer, i.e. you, a lot so I would recommend discussing the matter with your accountant and let them explain the relevant aspects.

thanks would it be easier to just employ someone part time then ?

It depends what you want. Employing someone is usually more expensive for the employer, unless you pay them under £5,715 in a tax year because you normally need to calculate tax and NI contributions (including employer's NI) on the salary you pay them. Employer's NI is the reason why a lot of the businesses prefer to treat their staff as self-employed rather than employed. At the same time this is the reason why HMRC looks into such businesses quite carefully.

If the people you intend to employ are legitimately self-employed (i.e. running their own cleaning businesses, albeit on a smaller scale than you are) then, as long as your paperwork is in order, you shouldn't have a problem. But if you treat people as self-employed but they only work for you (and nobody else) for a couple of years, you provide all their equipment and transport, pay them an agreed fee that doesn't get renegotiated for every new job then HMRC can easily prove that the people have actually been employed not self-employed and will recalculate all payments you've made as if it was net salary and make you pay the tax on those payments. That part could become very expensive.

The employment status issue is one of the hot issues for HMRC at the moment and that's why it's important to get it right. If you think the people would genuinely be self-employed then make sure the paperwork is in order and treat them as self-employed. But if you're planning to treat them as employees but pay them as self-employed then there could be problems.

The simplified way of thinking about it: imagine you've hired someone to redo your bathroom. You would show them to the bathroom, tell them what you want done, agree on a price and leave them to it (while possibly offering them cups of tea :) ) - they are self-employed. Their employer, on the other hand, would possibly give them the tools, the materials, the company van and would choose whose bathroom they work on at any point in the week, he would also pay them a fixed hourly salary - this would make them employees.

Obviously the above is a very simplified version of the whole employed/self-employed debate but will hopefully give you an idea of what I mean if the HMRC website doesn't make much sense.