Employment Law
End User Clients
A primary concern for end user clients relates to the deemed employment status of the freelancer. In the UK it is a general requirement that end user clients determine the employment status of an individual. But the present situation is still unclear.
Although in practice HM Revenue & Customs (HMRC) and Employment Tribunals use similar criteria for determining status, the law, particularly in respect of freelancers claiming employment rights is constantly being tested by interested parties.
A freelancer deemed by HMRC to be an employee could claim employment rights such as pension contributions, sick pay and other benefits in kind. Similarly a freelancer could claim unfair dismissal as an employment right.
Recently a number of high profile cases have been contested at Tribunal and subsequently been the subject of Appeal.
The importance of putting in place effective 'Contracts for Service' and associated working practices cannot be overstated.
Consideration should also be given to sourcing 'Employment Insurance' to cover the cost and awards associated with defending an employment rights claim at Employment Tribunal and Appeal e.g. a successfully defended claim could cost you circa £15K and an unsuccessful one circa £100K on each occurrence.
IFA Standard Freelancer Contract or Services
IFA Employment Insurance Provider(s)
Agencies
As with end user clients, agencies also have a general requirement to determine the employment status of an individual.
Employment Tribunal claims from freelancers against their end user clients and agents directly are increasing. Recent changes in tax legislation have reduced the disincentive for such claims.
A singular Tribunal claim can name the end user client, agency and payroll bureau as respondents.
It therefore important that the status of individuals is assessed correctly and that appropriate risk mitigation measures, including working practices and insurance, are put in place.
The conduct of employment agencies and employment business regulations require the agency to ensure they provide suitably capable and qualified individuals that are ‘up to’ the assignment.
Recruitment and selection processes are critical to this requirement. Competency based interviews, psychometric testing, pre employment verification including employment history, qualifications and financial probity (in appropriate circumstances) are increasingly important.
The importance of putting in place effective 'Contracts for Service' and associated working practices cannot be overstated.
Consideration should also be given to sourcing 'Employment Insurance' to cover the cost and awards associated with defending an employment rights claim at Employment Tribunal and Appeal e.g. a successfully defended claim could cost you circa £15K and an unsuccessful one circa £100K on each occurrence.
IFA Standard Freelancer Contract or Services
IFA Employment Insurance Provider(s)