There are two major areas of concern: what the potential tax implications are, and whether the individual will have any employment rights.
One practical step is to require the individual to produce confirmation from HM Revenue and Customs that they are self-employed. By itself, however, this is not enough to guarantee that they will not be considered an employee of yours: it is, for example, possible for an individual to be self-employed for other business activities but still be an employee of yours.
An individual is likely to be considered self-employed if they:
- Have a degree of control over what they do (eg making their own decisions on how to approach customers and arranging meetings independently).
- Bear an element of risk (eg using their own equipment and meeting their own expenses).
- Have more than one customer (eg acting as agent for other businesses as well)
If in doubt, ask for guidance from HMRC or take legal advice.
Be aware that even if an individual is self-employed, UK and European law gives agents certain rights. In particular, you may find that you have in effect guaranteed a certain level of earnings (see 14), and that you cannot terminate the relationship without paying some form of compensation (see 17).
