“Working at home” can mean that you have started your own business or that you are working as a freelancer. Being a ‘freelance’ worker can mean different things ― it all depends on what the real business relationship is, and it is vital to be clear on whether you are legally classified as a freelancer. Here are some top tips on the legal side of freelance working.
Selling your own work or time
- If you are working for someone else and they call you a ‘freelancer’ or an ‘associate’ or a ‘contractor’, that doesn’t mean you are self employed.
- If you are working set hours, using the “client’s” equipment, and your work is controlled by the “client”, you may be an “employee”, whatever label has been put on it by you and your “client”. Your “client” may be your boss!
- If you are not advertising or marketing for other work, it’s more likely that legally you will be treated as an ‘employee’ for tax purposes.
- An employment tribunal can make a decision that you are an “employee” even though you have put a different label on what you do.
- Even if you are not an “employee”, you may be a “worker” ― which gives you a full set of equality (non-discrimination) rights, working time and paid holiday rights. –You may also be covered by the National Minimum Wage rules.
- If you are on commission only or piecework rates you can still be entitled to National Minimum Wage in some circumstances [Read more on this here]
- Your client may have to deduct tax from what they are going to pay you under HMRC’s “IR35” rules, even if you are genuinely in business for yourself under a limited comany.
If “freelance” work is the right model for you, you need a proper agreement that not only sets out the relationship (so HMRC can see it is not an employment relationship) but also deals with:
- Who owns the copyright and other rights in the work they do. Without a good agreement, the worker will own the work even though you have paid for it to be done
- Confidentiality and data protection
- What happens about confidential information when they stop working for you
- The freelancer sending a substitute worker when they aren’t available. If the work has to be done by that person, and that person only, that’s one indicator that they are not self-employed
- What equipment they are going to provide?
- And there’s more……