When it comes to contracts and self employment there will be some differences between those rights afforded to employees working for an employer and people who are self employed. One of the major differences is that a self employed person will be responsible for their own tax and national insurance contributions. However there are still some contracts and self employed stipulations that must be considered.
Self Employment and the Employer
A self employed person will not usually have a contract of employment; they will usually be hired for a certain amount of time. The contract that exists between the self employed person and the person or company supplying the work will have a number of rules or conditions set down within it. The conditions will usually include rates of pay, length of time to complete a job and the services that will be offered and expected.
Self Employment Contracts and Agreements
Many self employed people work on a verbal agreements only basis, for example some individual trades people. However a verbal agreement to undertake work is still a contract and if this contract is breached then the worker can be sued by the person who has hired them. Written contracts are usually the best way to do business as they can clearly state the expectations, terms, and services that the self employed person offers.
Employee or Self Employed?
When it comes to worker’s rights one of the main differences is that the self employed are not generally protected by employment law. Many employers will use the term “self employed” for casual workers specifically because they think they will not have to pay casual workers tax or national insurance contributions. The employment statutory rights of an employee are also far greater than those of a self employed person.
If you have been offered work by either an individual or a company then it is important to find out whether you are classed as self employed or an employee. Self employed people may have greater control over time constraints, pay and decisions whether to refuse or accept work but they also have more financial responsibility. They will have to calculate and pay their own tax and national insurance, hire an accountant and may be responsible for employing their own staff.
The Importance of Contracts
It is important for the self employed to have a set of contracts laid out. Many self employed business people will hire someone to draft contracts for them as there can be clauses included that have legal definitions. One of the essential contracts for self employed people will be a contract for services. This contract should set out in detail the relationship between the self employed worker and the person they are hired to work for.
The contract for services should include clauses such as “no mutual obligations” meaning there is no obligation for either party to offer work, accept work or remunerate for work not undertaken. There can also be a clause included that limits or eliminates the amount of control regarding how you undertake the work; it will be the self employed person’s responsibility how the work is carried out. There should also be a substitution clause that permits the self employed person to employ a qualified worker to carry out work given to the self employed individual.
Where to Find Contracts
For the newly self employed person the range of contracts available can be bewildering. However there are websites where draft contracts can be downloaded for use. Be aware that some of these contracts will cost money to download. It may be a better financial option to invest in a few books that supply information on how to draw up your own contracts. Alternatively if you know someone already in business for themselves then you could always ask to view their contract templates to give you an idea of the layout and clauses. Information on contracts can also be found by small business advisors or government small business schemes.
The importance of well set out contracts and self employment stipulations should not be underestimated. The self employed have far fewer employment rights and more financial risk then regular employees. In some cases the contracts will be the only legally binding record available. The contracts are important documents in establishing the services and expectations between the self employed worker and those who are hiring them.
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