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With the ongoing shift towards employers using freelancers / contractors instead of employing PAYE workers and employees in the current uncertain climate, we look at how small business owners can get the best out of their relationship with freelancers, for the benefit of both parties. First you need to be clear why you want to use a freelancer / contractor and don’t need an agency temp or PAYE staff on a casual / fixed term / permanent contract. Ask yourself:
Keep in mind the complexities of employment legislation in the UK, such as the National Minimum Wage, The Working Time Regulations (hours of work, rest breaks and holiday entitlement), the Agency Workers Regulations – none of these will apply if the freelancer is ‘genuinely’ freelance but they will apply if they have ‘worker’ status. See our guide to employment status – this is not something you can decide yourself, it is subject to complicated legislative and HMRC rules, which mean if you hire someone as a freelancer but they are not genuinely freelance, your company and the freelancer could have problems later.
You can also read our advice about Company types for those who are self-employed and information on IR35 here. If you’ve decided that recruiting a freelancer / contractor is the best fit for the work you need done then recruit in the right places to get high calibre freelancers – freelancers tend to be found more through networking, recommendations, contacts, online professional networking or freelance job board sites where you can see their experience and references, or through specialist recruitment agencies; rather than through traditional recruitment sources like advertising or high-street temp agencies.
If you actually need to recruit a PAYE member of staff then take a look at our article for small business owners on what employment documentation you need to have in place. Before recruiting, consider the rate you will pay them by researching current freelance rates for the job you need done. However, remember all freelance jobs will be slightly different and all freelancers have different experience / qualities / skills / requirements. When you have chosen your freelancer (or a small pool of potential freelancers) ask them for a quote for the job then agree a price either for the whole job or for a daily or weekly rate. When you choose your freelancer be clear what you have agreed and what the ‘work’ that they will charge you for involves (i.e. does ‘work’ include attending meetings at your premises, travelling to meetings etc). Put this in writing for clarity. Importantly, you must check their:
When you meet to discuss the job or proposal with them in depth, listen to what they say, they may have ideas and experience you haven’t considered which your business could benefit from. When you have reached an agreement with a freelancer to hire them put a written agreement in place to set out your expectations of:
Many freelancers and employers don’t like a written contract of any description but we would recommend it to ensure clarity of what has been agreed so there can be no confusion later. A contract does not have to be long and complicated – see our contract templates for some examples.
If there is no actual contract then at least ensure that all of the above is included in a written e-mail for future reference. Include a clause where both parties can end the agreement early if things are not working out, for whatever reason, with a specified notice period if you require. You also need to agree when and how they will invoice you for their work (on a weekly or monthly basis or at intervals throughout the job) and when they will be paid. Pay them on time to ensure they are happy and continue working on your project and will work for you again (consider them as a networking tool who will spread good news about your business if they enjoy working with you). Explain what, if any, business related expenses they can claim. Explain what happens if they are sick and cannot work with regard to being paid.
Consider also if you expect them to work at your premises, all of the time, some of the time or not at all. You need to trust freelancers to complete your work but not constantly under your direct supervision. I’m afraid you will also need to consider the current Employment Policies you have for your PAYE staff and what will apply to Freelancers working for you. Brief them on what applies when they start work for you. This could include, for example, the need for them to be covered by your:
Throughout their assignment with you, ensure you communicate with them throughout their work, have regular briefings to see where they are at with your project and any changes that have occurred from their or your point of view and if this affects the timescale for completion. Ensure you stay on track of their progress – you’re the boss, and let them know immediately if there is something you are not happy with. Remember, however, they are specialists so don’t try to over-manage them, they may give you valuable advice. Also, integrate them into your existing team and ensure the team know what the freelancer is there to do. So, hopefully success all round! Freelancers – anything you would add to make sure a small business can get the most out of you? Let us know in the comments!
If you are an Employer and need ongoing professional help with any staff/freelance issues then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.
Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.
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