Freelancers vs Employees: A Big Mix-Up You Need to Avoid

Let’s talk about a mistake that’s easy to make but can cost your business a lot. This story is about a business that got into trouble because they mixed up how they paid their freelancers.

What Happened:

The business trusted the advice of their (ex) accountants and used the PAYE system, which is normally for regular employees, to pay their freelancers. This small change made a big difference. It turned the freelancers into employees without meaning to.

The Problem:

This mix-up landed the business in hot water. They had to invest in some expensive settlement agreements ?because now these freelancers had submitted tribunal claims and were after holiday pay for three years. Plus, there was a case about firing one unfairly. This cost the business a lot of money and time.

Here’s what you should remember:

Know Who’s Who: It’s really important to know the difference between a freelancer and an employee. Freelancers are like your own hired help for specific tasks, while employees are part of your team with different rights.

Be Careful with Money Matters: How you pay people can make a big difference. If you’re not sure, get some advice before you decide and run it past several professionals just to be sure!

Get Your Contracts Right: Make sure your contracts clearly say if someone is a freelancer or an employee. This helps avoid confusion and problems later. Employees require a contract of employment and freelancers a contract for services.

How you Treat them Matters: Keep in mind that with this issue, no contract will protect you if you treat freelancers like employees. HMRC and the tribunal system will look at what’s happened in practice, not just what’s written down.

Keep Up with the Rules: Employment laws change all the time. Make sure you know the latest to keep your business safe.

Ask the Experts: If you’re not sure about something, it’s always better to ask an HR expert.

It’s easy to make a mistake with freelancers and employees, but the costs can be huge. Be careful, keep things clear, and always stay updated on the rules.

Before you go, I've got something for you. If you found this article helpful, you'll love our comprehensive guide, "An Employer’s Guide to Freelancers: How to avoid freelancers claiming employment rights"

It's packed with easy-to-understand tips, clear examples, and practical advice to help you navigate these tricky waters with confidence.

Why download it?

- Step-by-Step Guidance: Get clear instructions on managing freelancers and employees the right way.

- Avoid Costly Mistakes: Learn from real-life examples so you don't fall into the same traps.

- Stay Updated: Keep up with the latest in employment law and best practices.

This guide is a must-have for any business owner looking to steer clear of legal pitfalls and build a thriving, compliant workplace. And the best part? It's absolutely free!

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Stay smart, stay safe, and let's make your business journey a smooth one!

What does your HR Consultant want for Christmas?

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What does your HR consultant dream of, you ask,

As festive lights twinkle, in the holiday’s mask?

Not trinkets or baubles, nor glittering gold,

But treasures of a different kind; precious and bold.

A testimonial, heartfelt and true,

A story of how I transformed your view,

Of workplaces, cultures, where dreams are made,

Where people are valued, not just simply paid.

A referral, a recommendation, a guiding light,

To others seeking to make their workplaces bright.

A nudge, a whisper, “Here’s someone who knows,

How to nurture a team, and help you grow.”

Repeat work, a sign of trust and rapport,

A journey together, opening new doors.

To continue the path of growth and success,

Bringing out the best, nothing more, nothing less.

And most of all, my Christmas wish, clear and bright,

Is to guide you on your journey, to heights of great height.

To see you thrive, in business and spirit alike,

That’s the gift that fills my heart, day and night.

So as you unwind in this festive cheer,

And the end of the year draws near,

Give a thought, if you will, in your festive pursuit,

To your favourite sweary HR consultant, a bit astute.

A word, a gesture, small yet profound,

Can lift my spirits off the ground.

Help me out, in ways you know best,

With a testimonial, referral, or a new request.

Together we’ll journey into the new year,

With hope, laughter, and maybe a beer.

For in this season of giving and love,

And your support is a gift from the stars above.

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Fancy more reading? Check out my most recent blogs

HR Grinch (Advice for Company Christmas Party)

Toxic culture – spot one, stop one, change lives

Workplace Culture HR: Building a Vibrant Company Culture

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?????? Have a very lovely winter festive break! ??????

Natalie | Founder and Director, Dynamic HR Services Ltd.