One way your business can take advantage of extra skills and labour without taking on many of the responsibilities of an employer is to use freelancers or outside contractors. These are workers who are self-employed or belong to separate outside companies.
For example, you might use an outside IT contractor to build your business web pages, or hire a freelance PR consultant when you want a promotional push for your business.
Advantages and disadvantages of freelancers and outside contractors
An advantage of using freelancers and outside contractors is that in many cases they look after all their own income tax affairs and National Insurance contributions. But it's always a good idea to check that you won't be responsible for deducting tax and National Insurance from their payments. Read more on IR35 and other special rules.
People who are genuinely self-employed may not be entitled to the same rights afforded to employees. However, depending on the contract under which they are providing services, they may qualify as workers. Under these circumstances they would be entitled to workers' rights such as holiday pay. If you are in any doubt about a person's employment status, you should seek professional advice. Read more on employment status.
Freelancers and contractors still have a right to the national minimum wage. But if they are being paid by their own firms, this will not affect you.
As an employer you still have responsibilities for the health and safety of freelancers and contractors. See how to write a health and safety policy for your business. Also, you should check whether your insurance is affected by having non-employees working on your premises.
Remember too that you should avoid discrimination against anyone who carries out work for you, whether they are employed by you or self-employed. See how to prevent discrimination and value diversity.
Know your legal responsibilities
- Do you need a licence?
- Get the right business insurance
- Comply with the law when providing goods and services
- Know your customers' rights
- Distance and online selling rules
- Understand pricing legislation
- Buying goods from outside NI
- Selling goods outside NI
- GDPR compliance checklist
- Pay your business rates
- Understand staff contracts and your responsibilities
- Taking on contractors and subcontractors
- What you need to do about health and safety
- Know your legal obligations on pensions
Understand tax and VAT
Sell and market your products or services