Can Your Household Staff be Self Employed?

    Income tax can be complex at the best of times but there are a few simple elements that both employers and employees need to be aware of when it comes to the matter of ‘employed’ versus ‘self employed’ status.

    This article is written In a bid to try and clear up some of the confusion surrounding the difference between PAYE earnings and being self employed in the private staff setting. It is not uncommon for domestic staff, particularly cleaners and housekeepers, to be registered as self employed. This can make sense particularly for part time cleaners with more than one place of work. They essentially manage their own time and hours and can therefore be considered self employed. It’s also appealing for people employing the services of these individuals as this means they can avoid the need of setting up formally as an employer with HMRC, managing a payroll and issuing payslips etc. This is particularly useful if you only require a part time cleaner for a few hours a week or on an ad hoc basis.

    There are however considerations of which you need to be aware. Generally speaking, as an Employment Agency and due to the fact that we recruit permanent members of staff to be employed directly by clients, it is unlikely that any of Marshall Harber’s candidates would be able to operate on a self employed basis, even candidates seeking part time positions. We regularly receive requests from client’s and candidates to source or recruit for roles that would suit a self employed person. But the primary issue is that our clients provide us with a job spec to recruit. Part of this job spec is to establish the working days and hours for the role and as soon as the employer is dictating days and hours for a permanent member of staff, the candidate must be considered as employed and there is actually a legal obligation on the employer to operate PAYE in these circumstances regardless of how many hours it is for. There is a test available on the UK Gov website (at the time of writing this article) where you can establish whether someone should genuinely be self employed or not. The online questionnaire can be used by both employers and employees and it can be found here: https://www.tax.service.gov.uk/check-employment-status-for-tax/disclaimer (Link correct at time of posting)

    Of course there are many employers of domestic staff that are not using an agency to recruit and they are completely flexible on the time the candidate works for them and may even book the hours week by week on an ad hoc basis directly with the candidate. Alternatively using cleaning companies is another way to engage self employed candidates. They must also be content for the candidate to send someone in to work on their behalf on any days that they are not available. These fundamental traits would all result in the candidate being considered self employed, however these are not generally the conditions and requirements that are presented or acceptable by clients using a Domestic Employment Agency and therefore any candidates (even if they have worked self employed previously) that we represent will need to be happy with working on a PAYE basis and to have their hours dictated by a permanent contract.

    There are other elements to self employment to be aware of but we have touched on one of the most common things that employers of domestic staff can misunderstand, particularly when sourcing the staff via an agency.

    For employers that find the prospect of setting up as an employer and managing payroll daunting (and we totally understand why), there is no longer any need to fear this aspect of employing staff. Marshall Harber are affiliated with a company called Stafftax. Not only do they make payroll easy, but they actually specialise in payroll for domestic household staff and nannies. The packages they offer are very reasonably priced and depending on what level of service you require, they can not only setup your employer account with HMRC and prepare monthly payslips, but they can even process all the payments to your employee and HMRC on your behalf and manage your workplace pension scheme. So there is really nothing you need to be concerned about other than enjoying the benefits of employing a permanent member of domestic household staff. Clients of Stafftax will also enjoy an added benefit of having access to their HR & Legal helpline as well as access to their employment contracts and advice on drafting these.

    If you would like any more information about this service or you would like to discuss your requirements with one our consultants, please call us on 0207 938 2200. You can also view further information about Stafftax and their services on their website: https://www.stafftax.co.uk/