Contracts for Suppliers and Freelancers

Contractual Work vs Employment Contract

Contractual workers, self-employed and freelancers get work without an employment contract. They do need something on paper to confirm the work they’ve been commissioned to do. So when a business engages the services of a freelancer or self-employed person, both enter into a business commitment. The arrangement is not an employment contract, however it should be formalised with a contractual agreement.

Self-Employed Workers

Self-employed individuals sometimes operate as a limited company. They may have one or several clients. Often outsourced workers are treated by the client as employed staff, in other words, they share the same benefits, including bonuses, as employed staff. But they must always formalise the business commitment or relationship with a legal document. Ideally, both the company and the worker should have terms and conditions, including non-disclosure agreement with the client.

Post-Pandemic Trend

Outsourcing has been around since the 1950s and it became extremely popular in the 21st century. After the Covid-19 pandemic, outsourcing has become a booming industry. Businesses outsource both in the UK and abroad. Call centers, typists, accountants, even lawyers are outsourced in order to cut down costs. Some outsourced staff have an employment contract with an outsourcing company. This means that the worker is employed or outsourced by an outsourcing company, but then the client has a commitment with the company.

HMRC

When a business engages the services of an outsourced worker or self-employed contractor, the business is committed to paying an invoice which may include expenses and VAT. Any tax and national insurance contributions are the responsibility of the worker, not the client. Any vat payments are made to the outsourced worker but the worker is the one who submits vat payments to HMRC.

If you are self-employed or are a company that engages the services of freelancers, you need to draft a contract. The contract should include confidentiality and non-disclosure clauses. It should include other clauses that cover areas of the business in order to protect the relationship with the worker and protect the business. SG

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