How do you KNOW your casual worker is indeed self-employed?

Hi all

I am relatively new to the business and do mainly garden maintenance on my own but have sometimes the chance to do some planting design and a bit of landscaping too (i.e. turfing and laying gravel,etc). I find that I sometimes need a helping hand with the landscaping jobs.
I have in the past called a polish chap that used to leaflet in my neighbourhood and when I did use him I always paid him in cash at £10/worked hour. I didn't get an invoice from him but a cash receipt stating what I had paid him (amount) and what the payment was for...in the likes of what I give my clients who want to pay cash for garden maintenance. I always understood this as being correct as this polish guy works for himself and is, in my understanding, self-employed and as such should take care of his own tax and NI payments. He is now sadly back in Poland and I am now looking for someone else to replace him.
I have been reading a bit about employing casual labour and am a bit worried as opinions diverge as to what is the correct way of going about it. How do you guys make sure that whomever you end up employing for a few hours or a day (that is generally the amount of time I'd need help with) is indeed self-employed? Do you need this person to then formally invoice you or is it ok to do what I had done in the past which is just get a receipt that I paid the person in cash? Should I start paying by cheque? Where can one find a definite answer/instructions of what is the legal way of employing someone for a day or two? I have read all I could at the HMRC site and some business forums but find that there is no example that fits my reality...

Any help/advice would be welcomed.

Many thanks, as always.

I have read a bit about zero-hour contracts and it seems to me that it demands a lot from "the employee" as he/she have to always be on-call and available whenever you, the employer, deem necessary. As explained, I only ever need someone to help in very specific situations and for maximum a day (at least until my business takes off, fingers crossed!) and so it seems like a lot to ask from whomever I end up hiring. Going the PAYE way also seems like a sure way to fail in business for someone like me as it is too time consuming.
I am beginning to realise that it is very hard to get someone to agree to work for only a few hours once in a blue moon if they are set up with a van/own tools, etc etc. Chances are these people will be very busy if they are any good and that leaves me with having to look at hiring men who call themselves handymen and state that they are free for a few hours to take on a new job. After your advice, I am inclined to only pay by cheque from now on and have a document ready for them to sign where they declare themselves to be self-employed and aware of the fact that they are to sort out their taxes themselves.
Would any of you be willing to share the text/wording of such a contract? As for calling the HMRC, do they disclose this type of info over the phone? Has anyone done that in the past?
It is so difficult to do things right, isn't it??

One more thing: In case such a casual worker ends up destroying a wall or breaking a window, is he at fault as a self-employed casual worker or am I to blame? Should I change my insurance to include any casual worker that I might hire in the future? Or is then sub-contracting always a better option, even if for only a few hours?

Thanks everybody! It is daunting!!

Replies

PRO

Phil Voice July 31, 2013 at 5:11pm

Hi Maria

Not a direct answer to your question but this may help?

Employment status
https://www.gov.uk/employment-status/selfemployed-contractor
Craig Downey August 5, 2013 at 8:07pm

I paid my brother cash every day when I first started ( he was registered self employed so put what I paid him down as earning...it wasn't a tax fiddle as far as I was comcerned) but my accountant soon stopped me and said basically, if you tell them when to start, when to finish and what to do in between, then they are employed and should be payed as an employee and everything else that goes with it, payslips, paye ni contributions etc
Gareth Main @ Newick Landscapes August 5, 2013 at 9:17pm

I'd agree with what Craig has said. I now employ full time staff but even when I started employing 6 years ago I still used PAYE with a 0 hrs contract for someone on a causal basis. If it's the same person on a regular basis your have to use this option.

Using a sub-contractor is still fine, if you have concerns ask them to prove they are self employed or check with HMRC. While you could pay in cash with a receipt/invoice, I suggest using cheque or BACs as if you had an audit/ record check they may want investigate your cash payments further.

If your only using someone every so often who is definitely self employed (own transport, tools, insurance etc) then sub-contracting is much less hassle to start with. Make sure the invoices are for the job undertaken rather than a list of hours worked.
Neil Petrie BSc Landscape Mgt August 5, 2013 at 11:00pm

Ensure an audit trail as above - cheque or bacs. Have them sign something that you have put together that basically says the agreement you have and that they are self employed and are herefore liable for their own tax and ni contributions. Dated and signed. If that's ok with them it's a good indicator that they are genuine.

I know what Craig says is technically correct but the way to work that is that you just give them a task to complete and allow some discretion if possible.
Maria Silva August 6, 2013 at 12:08pm

I have read a bit about zero-hour contracts and it seems to me that it demands a lot from "the employee" as he/she have to always be on-call and available whenever you, the employer, deem necessary. As explained, I only ever need someone to help in very specific situations and for maximum a day (at least until my business takes off, fingers crossed!) and so it seems like a lot to ask from whomever I end up hiring. Going the PAYE way also seems like a sure way to fail in business for someone like me as it is too time consuming.
I am beginning to realise that it is very hard to get someone to agree to work for only a few hours once in a blue moon if they are set up with a van/own tools, etc etc. Chances are these people will be very busy if they are any good and that leaves me with having to look at hiring men who call themselves handymen and state that they are free for a few hours to take on a new job. After your advice, I am inclined to only pay by cheque from now on and have a document ready for them to sign where they declare themselves to be self-employed and aware of the fact that they are to sort out their taxes themselves.
Would any of you be willing to share the text/wording of such a contract? As for calling the HMRC, do they disclose this type of info over the phone? Has anyone done that in the past?
It is so difficult to do things right, isn't it??

One more thing: In case such a casual worker ends up destroying a wall or breaking a window, is he at fault as a self-employed casual worker or am I to blame? Should I change my insurance to include any casual worker that I might hire in the future? Or is then sub-contracting always a better option, even if for only a few hours?

Thanks everybody! It is daunting!!
Simply Business August 6, 2013 at 2:59pm

Hi Maria,

that's a tough one! Regarding your zero-hour predicament, have you looked at free lance workers? These would only work for you as and when they can and when you need them. You'd pay them for the work but would not be a fulltime employee. The downside is that freelancers tend to be more expensive than hiring a regular employee.

Regarding the insurance issue: (this will sound a little strange....) if you give them tools to work and tell them where to work, then they're an employee and as such need to be covered by your insurance under employment cover (this is a legal requirement). However, (and this is where it gets a little tricky) if they come in, do a specific job and leave without being given tools or directions on what to do, then they're classed as a sub-contractor and they'd need their own cover (usually public liability). The best example I can think of is if you're a builder and you get another business in to do the air-conditioning - they'll have their equipment and tools, will know what to do and will also bill you at the end of the work.

If you have temporary workers, they would need to be covered under employers liability.