WHAT IS A MICRO EMPLOYER?
A micro employer is a business or individual which employs one or more people but less than five. Even if you pay someone to clean your home or work as a nanny or a carer then you are considered to be a micro employer.
It is important that you understand your legal obligations if you are a micro employer. You have obligations and responsibilities to your employees such as sick pay and holiday pay. You may also have to register for income tax and pay national insurance contributions. You will have a contract of employment with your employee even if it has not been formalised in writing. This will be the agreement that you came to with the employee when you agreed to offer them a job. It is in both parties interests if this agreement is recorded in writing and signed by both parties. This contract of employment will need to state the terms and conditions of employment and the starting remuneration. It will need to include contractual hours and any conditions of variation such as overtime working or bonus payments. This should be done within two months of commencement of employment.
This does not mean that everytime you engage some ones services that you become their employer. If you engage someone who is self employed on a freelance basis then you do not have any employer responsibilities towards them. You will have come to some agreement about the work to be done and this will form the basis of the contract between you as the customer and the freelance as the service provider. This also applies if you pay for agency staff or casual workers.
So to clarify the situation if the following rules apply then you are an employer.
1. You are responsible for finding work for the worker and instruct them on the methods of work that they must use.
2. Regular payments are made to them on a weekly or monthly basis. With freelance or casual payment is normally made only on completion of a job or project or on completion of agreed targets and milestones.
3. If the worker is absent and you have to back fill their duties with another worker then you are acting as an employer. If a freelance is unable to work on a project or work task then it is up to the freelance to arrange a replacement or if this is not possible you as the customer will have to engage another service provider. For example if you run a building company and you give work to the same bricklayer week in week out and demand their services exclusively and you provide all of their work then you should have a contract of employment. However if the bricklayer is free to source his own work and to ply his trade as he chooses then he is freelance. If the employee was to report sick then you as the employer would have to arrange a replacement from within your own workforce or by hiring a casual or freelance on a short term basis. You would also have to provide some level of sick pay. If the freelance was unavailable due to sickness then as the customer of this self employed service provider you could look to another service provider to do the work and have no obligation to the original freelance.
4. If you are responsible for providing the equipment to do the work then you are the employer. For example if you have a sales team and you provide them with cars, computers and corporate clothing at your expense. A freelance would be expected to provide this equipment themselves.
5. If you are a micro employer then you are bound by the same regulations as any other employer. Therefore you will need to take all the following into consideration:
• Dismissal laws
• Sick pay
• Maternity, paternity and adoption
• Discrimination
• Disability laws regarding your premises
• Health and safety at work
• Employers liability insurance
• National minimum wage
• European working time directive
• UK immigration law
• Tax and national insurance responsibilies
For more detailed and expert information and help contact:
HM revenue and customs 0845 607 0143
Citizens Advice Bureau Coventry 024 7625 2052
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