What are the legal considerations for small business owners wanting to hire freelancers? And what are the legal implications of the gig economy from an employer’s perspective? Read on to find out more.
Flexible working is on the rise, and there are clear benefits for everyone. Hiring freelancers offers flexibility and potentially big cost savings because you only use them when demand is there.
But why is there such controversy around freelancing? Why are freelancers taking legal action that is leading to new “landmark” decisions on workers’ rights?
Many businesses regularly use freelancers to fill short-term positions or carry out specific tasks without issue. Other businesses need permanent staff and so employ them in the normal way. This is fine and everything is clear cut. The problems occur in the middle ground when businesses treat their workers as employees but pay them as freelancers without any legal rights or protection.
Many high-growth start-ups are tempted by this arrangement, even though they should really give their workforce the rights and protections that they are entitled to as employees.
When does a freelancer become an employee?
If you need someone to do regular work, and they are obliged to do this work, this would indicate that they’re an employee. If they’re genuinely free to pick and choose the work they do, this would suggest that they are a freelancer.
However, if you call someone a freelancer and say they have the freedom to choose but actually put too many restrictions in their contract – so that they’re not free to work elsewhere, for example – this may indicate that you’re treating them as an employee.
The more a worker is integrated into a business, the more likely they are to be an employee. Does their name appear in the internal phone directory, for example? Do they have a work email address? If so, they’re likely to be seen as an employee.
Under the law, employees are entitled to all sorts of protections. They’re entitled to a minimum wage, sick leave, a pension and they have protection against being unfairly dismissed, for example.
Freelancers don’t have any of this. They’re simply paid for what they do – so if they don’t work, they don’t get paid.
There’s no doubt that flexible working and self-employment is becoming even more popular for both businesses and workers.
The issue of being employed versus being self-employed is therefore subject to close scrutiny and review at present. It’s likely that we’re going to see some big changes to the law in this area in the near future, so watch this space.
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