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The Rise of the Contractor

Wednesday, 11 December 2013

As a result of the huge economic changes of recent years, the employer-employee relationship has evolved dramatically for many workers.

Traditional “employee” roles are no longer considered as the default for many businesses looking to fill positions. Employers often seek more temporary and flexible arrangements by hiring self-employed contractors instead of recruiting salaried employees.

Employers must be cautious when creating these types of new working relationships. It is surprisingly easy to inadvertently create an employee relationship, even where both parties may have initially intended for an employee to be self-employed.

Worker Status: Rights and Responsibilities

Employee, self-employed, director or partner; each different employment status brings with it different rights and responsibilities for both the employee and the employer.

Usually, roles are clearly identifiable but there can be some confusion when distinguishing between employees and self-employed contractors.

Self-employed workers are responsible for submitting their own tax returns and paying their own taxes and National Insurance contributions. They also have fewer employment rights than the traditional employee who is entitled to benefits such as holiday pay and pension provision.

An employee will have their tax and National Insurance contributions deducted by their employer and will also benefit from other statutory employment law rights such as maternity, adoption and parental leave, the right not to be unfairly dismissed and redundancy pay.

While many individuals prefer the increased security and consistency of the more traditional, fixed employment position; there are many advantages to the flexibility and variation that life as a self-employed contractor or freelancer can bring.

Be Sure About Your Rights and Responsibilities

It is important to seek legal advice on employment status for both businesses and individuals.

The true legal status of an individual’s employment will depend on much more than the label given to them as “contractor” or “employee”, including the individual circumstances and nature of their role and their relationship with the employer.

Even a freelancer who is registered as self-employed with HMRC may be considered to be an “employee” for the purposes of employment law by an employment tribunal.

Factors that will determine the relationship include the amount of control an individual has over their work, their level of involvement and exposure to risk in the business of the employer and the amount of flexibility in the mutual obligations to offer and accept work.

Seek Expert Help

Whether you are self-employed, an employee or running a business and want to know more about the different employment relationships that may affect you and your business, please contact Aneil Balgobin via e-mail or by telephone on 0207 611 4848 today for more advice on all aspects of the employer-employee relationship.

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