Sussex


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<p>Should you pay your cleaner in cash? Does anyone bother with a contract when someone comes to cut the grass once a week? Most of us ignore these questions and just bury heads in the sand when it comes to having some help be it the nanny or a PA for your small business. But it’s time to stop. </p>



<p>With the turn of a new financial year, there’s no time like the present to get legally literate and work out what you need to know about employing staff from contracts to sick pay, and your staff / contractor or home help&#8217;s rights too. Here to advise is Amy Richardson, a Senior Associate in the Employment team at <a href="https://www.knightsplc.com/">Knights’ Brighton</a> who gives Muddy the full legal lowdown.</p>



<h3 class="wp-block-heading" id="h-what-actually-qualifies-as-employment-for-individual"><strong>What actually qualifies as employment for individual?</strong></h3>



<p>It is common for cleaners, housekeepers, and gardeners etc, to be registered as self-employed. This makes sense, particularly if the individual has more than one place of work. They essentially manage their own time and hours and can therefore be considered self-employed. The benefit of this is that the people employing the services of these individuals can avoid the need to set up formally as an employer with HMRC, manage a payroll and issue payslips etc. This arrangement is particularly useful if you only require support for a few hours a week, or on an ad hoc basis. In this type of relationship, it would be understood that the individual could potentially send in a substitute if they were ill or on holiday.&nbsp;</p>



<p>However, where this can stray into an employment relationship is where you require the personal service of that individual only and do not allow them to send in a substitute; where the individual is required to perform duties under your control and supervision and is paid to provide this service on fixed hours/day with no flexibility. You can’t get around the fact that someone is employed by paying them cash. The test as to whether the individual is employed by you (and therefore you should be making tax/NI deductions) is determined by what happens in practice and the degree of control that the ‘employer’ has over the individual. If you pay your cleaner via an agency then you do not need to worry about the employment status, as the agency will be taking care of any employment and tax liabilities.&nbsp;</p>



<h3 class="wp-block-heading" id="h-what-is-the-most-essential-thing-to-do-once-you-ve-agreed-the-pay-hours-and-work-nbsp"><strong>What is the most essential thing to do once you’ve agreed the pay, hours and work?&nbsp;</strong></h3>



<p>You need to provide a written contract of employment from day one and there is a long list of items that must be set out in that contract for it to be legally compliant (such as what benefits are available, what notice is required from either side to terminate employment, what type of paid leave is available e.g. sick pay, maternity/paternity etc). It is a good idea to have a probation period (three months is usual, with an option to extend if required) with a short notice period required in that time, so that both parties are not tied in until it is agreed that the relationship is working and you want it to become permanent, with longer notice required to terminate.</p>



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<h3 class="wp-block-heading" id="h-who-is-responsible-for-paying-tax-nbsp"><strong>Who is responsible for paying tax?&nbsp;</strong></h3>



<p>If the individual is self-employed then they are responsible for paying tax on their earnings. If they are hired and paid via an agency, then the agency is responsible for paying tax. However, if they are employed by you, then you are responsible and would need to be registered with HMRC to process PAYE. There are organisations that can help you with the admin of PAYE when you only have one or two employees if you would prefer to not register yourself.&nbsp;</p>



<h3 class="wp-block-heading" id="h-what-about-sick-pay-and-holiday-pay"><strong>What about sick pay and holiday pay?</strong></h3>



<p>An employee will accrue 28 days holiday per year (pro rata if they work less than full time). They can choose to take those days as holiday and you pay them as normal for those days, or it is possible to pay an additional element to their hourly rate to account for holiday. This is called rolled up holiday pay and is only allowed in certain circumstances, so you should take advice if that were something you would like to consider. The government website has some useful tools for calculating the annual holiday entitlement for someone who works anything less than full time hours, and also how to calculate their holiday pay.</p>



<p>Statutory sick pay (currently £109.40 per week) is paid for any days that the employee is too unwell to work. There are three ‘waiting days’ which means the first three days of absence are unpaid and then SSP will be payable from day four onwards, up to a maximum of 28 weeks. Therefore, if an employee has less than four days off in a row, they would not receive SSP for that particular absence. It is possible to enhance SSP so that you offer a payment from day one of sickness, or you offer more than the SSP rate. If you do this on a discretionary basis, then it is possible that you develop a custom and practice for always paying full pay for sickness, which then becomes an implied contractual term which you need to honour for all future absences.&nbsp;</p>



<h3 class="wp-block-heading" id="h-what-are-the-legal-requirements-of-an-employer-who-hires-a-contractor-on-a-rolling-basis-nbsp"><strong>What are the legal requirements of an employer who hires a contractor on a rolling basis?&nbsp;</strong></h3>



<p>Someone who is a genuinely self-employed contractor (or who is employed by another company/agency to provide work to you) can remain as self-employed for a long time and they would not accrue holiday that you have to pay for. The only thing to bear in mind is that if an individual provides services to you for an extended period of time, and that the relationship has changed over time (so that you have more control over them and they do fixed hours of work for you etc) then it could possibly be argued that the relationship has changed into an employer/employee one. There isn’t a specific length of time that this can happen but the longer someone provides services to you, the more risk there is of an employment relationship being established.&nbsp;</p>



<h3 class="wp-block-heading" id="h-what-s-an-ir35-and-should-we-be-concerned-about-it-nbsp"><strong>What’s an IR35 and should we be concerned about it?&nbsp;</strong></h3>



<p>IR35 does not apply to an individual providing services directly to another individual/company/organisation. It only applies where the individual uses a personal service company (PSC) to provide those services. For example, if your gardener is called Andy Smith and he gives you an invoice from his company ‘Andy Smith Ltd’, then this means he is using a PSC to receive the money you pay him and he pays tax based on him being a company rather than an individual.&nbsp;</p>



<p>IR35 operates to assess whether Andy genuinely is using the company legitimately to run his gardening business and he may have other employees that he could send to provide the services, or whether it is only Andy Smith providing the services and people are hiring him personally and think they are working directly with him. This is a very complex area and the onus is on the individual to ensure they are paying the correct amount of tax.</p>



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<h3 class="wp-block-heading" id="h-what-about-maternity-pay-sick-pay-and-offering-flexi-working-nbsp"><strong>What about maternity pay, sick pay and offering flexi working?&nbsp;</strong></h3>



<p>Employees have the right to take maternity and other family friendly leave (paternity/parental/shared parental/adoption). This is a day one right, so even if an employee is pregnant when they start working for you, they would be entitled to take the full statutory leave of 52 weeks. Maternity and other family pay however is based on eligibility and the employee needs to have certain length of service with you to receive statutory maternity pay, or the other family pay. Generally speaking, you are able to reclaim some or all of the pay from the government if you are set up with PAYE. An employee without the requisite length of service to be eligible for maternity pay may be able to claim a maternity allowance directly from the government. With regard to flexible working, an employee can make up to two requests a year to permanently change their working hours (either the start/finish times, the number of hours/day, or the location in which they work). It is a right to request, and not a right to work flexibility, so if the proposed change does not work for their employer, then it can be rejected.</p>



<h3 class="wp-block-heading" id="h-what-are-the-rules-around-letting-your-cleaner-nanny-gardener-go-do-you-have-to-give-them-notice-nbsp"><strong>What are the rules around letting your cleaner/nanny/gardener go &#8211; do you have to give them notice?&nbsp;</strong></h3>



<p>If there is any written contract (either self-employed or employed) which contains terms relating to notice periods, then you would need to abide by those.&nbsp;</p>



<p>If there isn’t a written contract then:&nbsp;</p>



<ol>
<li>if they are genuinely self-employed, then you can terminate by giving reasonable notice (probably one or two weeks would seem reasonable, unless they have worked for you for many years in which case a month might be more appropriate); or</li>



<li>if they are an employee then you have to give one weeks’ notice for each complete year of service (up to a maximum of 12 weeks).&nbsp;</li>
</ol>



<h3 class="wp-block-heading" id="h-should-we-be-concerned-about-unfair-dissimilar-employment-tribunals-nbsp"><strong>Should we be concerned about unfair dissimilar, employment tribunals?&nbsp;</strong></h3>



<p>If they are an employee, you have to have a fair reason to dismiss and you must follow a fair process in terminating them. This means at the very least informing them that you are considering terminating their employment and giving details of the reasons why, inviting them to a meeting to discuss the reasons, confirming the decision in writing, and giving them the right to appeal. An employee who has been with you for more than two years has the right to claim unfair dismissal.&nbsp;</p>



<p>For employees with less than two years’ service, you can dispense with the more formal dismissal process. However, there are other claims that can be brought by employees with less than two years’ service, such as discrimination, so it is always sensible to follow a fair process rather than dismissing on the spot.&nbsp;</p>



<h3 class="wp-block-heading" id="h-are-there-any-issues-people-should-be-concerned-about-coming-back-to-bite-them"><strong>Are there any issues people should be concerned about coming back to ‘bite them’?</strong></h3>



<p>People often forget to think about proper notice and holiday pay, so this is often an area that needs to be resolved once the relationship has ended. Often the employee or worker won’t mention it at the time of leaving, but belatedly get some advice and realise they perhaps weren’t paid everything that they were owed. If a bad reference is given and this affects the individual’s ability to find alternative work, then they are more likely to come back to you to complain about how they were treated. Giving a neutral standard reference which only confirms job title and dates of employment is becoming increasingly more common.</p>



<h3 class="wp-block-heading" id="h-if-you-could-offer-one-piece-of-legal-advice-to-people-who-hire-staff-what-would-it-be-nbsp"><strong>If you could offer one piece of legal advice to people who hire staff what would it be?&nbsp;</strong></h3>



<p>Be clear in your contract about what the pay and benefits are. Be clear about what the job entails by having a detailed job description and ensuring the employee knows what to expect from the role. Get a good understanding of basic employment rights before you hire someone as this will stand you in good stead if things start to unravel.</p>



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Boss it! Employment expert on your legal responsibilities are when hiring staff

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