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Employer asking staff member to register as self employed, advice please

Veni Vidi Vici

Well-known Member
Does anyone know much about the consequences of this or if this is normal practice? A colleague asked me for my advice as he thinks it sounds dodgy and I agree with him. From what he has said his son works in a barbers, gets paid by bank transfer but doesn't get a pay slip. The bloke who owns the business has asked this lad to register as self employed but still expects him to work four days a week. Surely the point of being self employed is you choose when you work and I thought you had to get a payslip by law? I can only assume the owner is up to something dodgy but maybe this is common practice in that field of work, any thoughts?
 

mjn

Distinguished Member
Being self employed means the lad will not get any holiday entitlement, sick pay, benefits from the barbers. He will also be liable to sort his own tax out and NI contributions.
 

Veni Vidi Vici

Well-known Member
Being self employed means the lad will not get any holiday entitlement, sick pay, benefits from the barbers. He will also be liable to sort his own tax out and NI contributions.

If thats the case then surely they can't dictate what days he works? Presumably he can refuse to register as self employed?
 

mjn

Distinguished Member
If thats the case then surely they can't dictate what days he works?

Well, not quite. You can't have staff working willy nilly. As the barbers could end up 5 staff one day and 1 on another.
 

mjn

Distinguished Member
So are you saying you can be your own boss but told when you must work at the same time?

Yes. When you are self employed you can still work for people (clients) and they will require you to work certain days / hours.
 

BobBob21

Well-known Member
If thats the case then surely they can't dictate what days he works? Presumably he can refuse to register as self employed?

Not at all, its an urban myth that its the case.

When 1 "business" hires another "business" it can stipulate what times/days they can work. If you run a call centre that operates Mon-Sun 8-8 you'd dictate that the cleaning company comes in at 9pm at night as you wouldn't want a hover going around the agents whilst they're trying to talk to customers.

mjn said:
Well, not quite. You can't have staff working willy nilly. As the barbers could end up 5 staff one day and 1 on another.
But they aren't "staff" as staff are employees
 
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mjn

Distinguished Member

Veni Vidi Vici

Well-known Member
There isn't really. I know the tax system can be favourable though.

So he can dictate what days he works and doesn't have to give him any holiday leave, sick pay or sort any of the tax/NI out. Doesn't sound like this lad would have any protection. No wonder he wants him to go self employed.
 

Jowsey

Active Member
The boss is trying to skip out on having to pay employers national insurance and pension contributions if you ask me.

He'll also be very easy to get rid of at a later date.

Additionally, your mate will have to register as self employed abd complete a tax return. And HMRC have been known to challenge these kind of 'contrived' self employed positions.

Like above I'd tell your mate to stick as I wouldn't want to work for someone who is happy to 'risk it' against HMRC. They very rarely lose.
 

BobBob21

Well-known Member
So whats the benefit to the person who is self employed?
It depends....

If you look at my world (IT/ Projects etc in financial services) you exchange "job security", employment rights, holiday etc for much higher cash payment. A good PM in financial services can comfortably earn £70,000 salary plus benefits, holiday etc which would be £270/day roughly. A contractor doing the identical job can comfortably earn £600/day but no benefits, no holiday pay, no sick pay etc and often a notice period of a week or so if they decide they don't need/want you any more.

In other industries its simply a way for the company to mitigate costs/reduce risks etc and so there is no monies reflection.

Depending on your ethics and/or level of risk you're willing to run then you can potentially reduce your tax burden compared to someone earning the same as a perm employee but then you may find HMRC come knocking if they think you've moved from tax avoidance (legal) to tax evasion (illegal)
 

mjn

Distinguished Member
So he can dictate what days he works and doesn't have to give him any holiday leave, sick pay or sort any of the tax/NI out. Doesn't sound like this lad would have any protection. No wonder he wants him to go self employed.

Correct. And the barbers should be taking no tax from his pay cheque if he goes self employed, as it'll be the lad's responsibility to pay the correct amount of tax by declaring his income to the HMRC.

I'm not self employed, so don't take my word as 100% correct though.

Being self employed can work for some people, such as if you're a driving instructor, you could arrange lessons for any day / time. i.e. you could have every Wednesday off and Friday afternoon. But working in a barbers will be different, as they will have busy periods which the manager will know and thus will require a certain number of cutters in for those periods.
 

Veni Vidi Vici

Well-known Member
It depends....

If you look at my world (IT/ Projects etc in financial services) you exchange "job security", employment rights, holiday etc for much higher cash payment. A good PM in financial services can comfortably earn £70,000 salary plus benefits, holiday etc which would be £270/day roughly. A contractor doing the identical job can comfortably earn £600/day but no benefits, no holiday pay, no sick pay etc and often a notice period of a week or so if they decide they don't need/want you any more.

In other industries its simply a way for the company to mitigate costs/reduce risks etc and so there is no monies reflection.

Depending on your ethics and/or level of risk you're willing to run then you can potentially reduce your tax burden compared to someone earning the same as a perm employee but then you may find HMRC come knocking if they think you've moved from tax avoidance (legal) to tax evasion (illegal)

I'm assuming a barber would be on minimum wage so I'd be surprised if they were paying him anymore by going self employed, he never said anything to me about more salary either.
 

Veni Vidi Vici

Well-known Member
Correct. And the barbers should be taking no tax from his pay cheque if he goes self employed, as it'll be the lad's responsibility to pay the correct amount of tax by declaring his income to the HMRC.

I'm not self employed, so don't take my word as 100% correct though.

Being self employed can work for some people, such as if you're a driving instructor, you could arrange lessons for any day / time. i.e. you could have every Wednesday off and Friday afternoon. But working in a barbers will be different, as they will have busy periods which the manager will know and thus will require a certain number of cutters in for those periods.

Yes I get the benefits if you are working for yourself but this sounds like the barbers is employing someone but treating them as self employed at the same time. Seems unethical and borderline illegal to me but I've never been self employed.
 

Desmo

Distinguished Member
There doesn't seem to be any benefit for the lad, just the business owner.

My guess, and it could be totally wrong, but the owner could have been recording the pay as casual wages and so no need for a payslip. As the pay has increased it's getting a little too high for causal and rather than employing the lad properly he wants an easier option.

The lad could still negotiate being self employed but with a contract that covers sick pay and holidays. We do the same here with one person who works part time self employed but we cover some sick pay and holidays also.
 

mjn

Distinguished Member
Yes I get the benefits if you are working for yourself but this sounds like the barbers is employing someone but treating them as self employed at the same time. Seems unethical and borderline illegal to me but I've never been self employed.

If he is self employed, he is working for himself, but essentially using the barber's premises to conduct his business. If he wanted, once self employed, he could work 4 days at his current barbers and 3 at another, if another barber required somebody on those 3 days.
 

imightbewrong

Distinguished Member
Yes. When you are self employed you can still work for people (clients) and they will require you to work certain days / hours.

They can ask but they can't 'require' - just like you can't 'require' your gardener, painter etc to work on a specific day - they may be doing another job for someone else on that day - that's what being self employed is all about.
 

Veni Vidi Vici

Well-known Member
If he is self employed, he is working for himself, but essentially using the barber's premises to conduct his business. If he wanted, once self employed, he could work 4 days at his current barbers and 3 at another, if another barber required somebody on those 3 days.

Yes from what I've just read elsewhere online this happens however the self employed person normally takes payment from the customer and pays rent to the owner. I think in this instance they aren't offering that, just the same pay.
 

imightbewrong

Distinguished Member
...no holiday pay...

Agree on the other things, but 'paid holiday' is up there in myth land as far as I'm concerned.

Your £70K guy shows up for work maybe 220 days a year - that's a rate of £318
The contractor shows up for the same amount of days at £600 => £132K

"Holiday Pay" doesn't come into it. Notice periods, redundancy pay, sick days, paternity/parental leave etc are all factors in the permie's favour though.

In the contractors favour - LOOT!
 

mjn

Distinguished Member
Yes from what I've just read elsewhere online this happens however the self employed person normally takes payment from the customer and pays rent to the owner. I think in this instance they aren't offering that, just the same pay.

Yes, agreed. As somebody else has already said, it sounds as if the owner doesn't want the hassle of doing and the cost of PAYE.
 

mjn

Distinguished Member
They can ask but they can't 'require' - just like you can't 'require' your gardener, painter etc to work on a specific day - they may be doing another job for someone else on that day - that's what being self employed is all about.

Correct, but that person can't work those days / times, they often don't get selected for the job.
 

Veni Vidi Vici

Well-known Member
Correct, but that person can't work those days / times, they often don't get selected for the job.

The only difference is they already work there so effectively all that will change is they will be classed as self employed without any extra money and none of the perks of being an employee.
 

ChuckMountain

Distinguished Member
Hairdressers sometimes rent a chair in a barbers\hairdresser so they are effectively self employed.

They usually agree days covered etc so they can plan staff, appointments etc.
 

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