subject: Self Employment Service Agreements [print this page] Self Employment Contracts Self Employment Contracts
A self employed person will not usually have a contract of employment; they will usually be hired for a certain amount of time. The contract that exists between the self employed person and the person or company supplying the work will have a number of rules or conditions set down within it. The conditions will usually include rates of pay, length of time to complete a job and the services that will be offered and expected.
Contract for Services
Contract for services are agreements essential for professional and small term business relationships. These agreements are between the parties to undertake some work (for example, consultancy, paint house, etc). Such contracts contain a number of terms and conditions which must be clearly defined and agreed upon. They set out the service that is provided and also the expectations, requirements and obligations for both service provider and customer. Any breach of the terms can result in legal proceedings either to service provider or the customer.
Contract of Service
There is always a contract between an employee and employer. You may not have anything in writing, but a contract will still exist.
A contract gives both you and your employer certain rights and obligations. The most common example is that you have a right to be paid for the work you do. Your employer has a right to give reasonable instructions to you and for you to work at your job. These rights and obligations are called contractual terms.
The rights that you have under your contract of employment are in addition to the rights you have under law, such as, for example, the right to a national minimum wage and the right to paid holidays.
Contracts for Services and Contracts of Services
Often people get confused about contract for services and contract of services.
The term:
"contract of service" relates to a person in employment (as in the case of a domestic servant who is described as being "in service")
"contract for services" relates to a person who is self-employed and who provides services to clients.
Do I need a Verbal or Written Self Employment Contracts
Many self employed people work on a verbal agreements only basis, for example some individual trades people. However a verbal agreement to undertake work is still a contract and if this contract is breached then the worker can be sued by the person who has hired them. Written contracts are usually the best way to do business as they can clearly state the expectations, terms, and services that the self employed person offers.
Employed or Self-Employed?
In order to answer this question it is necessary to determine whether the person works under a contract of service (employees) or under a contract for services (self-employed, independent contractor). For tax and NICs purposes, there is no statutory definition of a contract of service or of a contract for services. What the parties call their relationship, or what they consider it to be, is not conclusive. It is the reality of the relationship that matters.
In order to determine the nature of a contract, it is necessary to apply common law principles. The courts have, over the years, laid down some factors and tests that are relevant, which is included in the overview below.
As a general guide as to whether a worker is an employee or self-employed; if the answer is 'Yes' to all of the following questions, then the worker is probably an employee:
Do they have to do the work themselves?
Can someone tell them at any time what to do, where to carry out the work or when and how to do it?
Can they work a set amount of hours?
Can someone move them from task to task?
Are they paid by the hour, week, or month?
Can they get overtime pay or bonus payment?
If the answer is 'Yes' to all of the following questions, it will usually mean that the worker is self-employed:
Can they hire someone to do the work or engage helpers at their own expense?
Do they risk their own money?
Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves?
Do they agree to do a job for a fixed price regardless of how long the job may take?
Can they decide what work to do, how and when to do the work and where to provide the services?
Do they regularly work for a number of different people?
Do they have to correct unsatisfactory work in their own time and at their own expense?
Why is it Important to find out Employment Status?
It is very important to find out what your employment status is. Many employment rights, such as the right not to be unfairly dismissed, and the right to redundancy pay, rely on you being an employee. The employment statutory rights of an employee are also far greater than those of a self employed person
Furthermore, self employed people may have greater control over time constraints, pay and decisions whether to refuse or accept work but they also have more financial responsibility. They will have to calculate and pay their own tax and national insurance, hire an accountant and may be responsible for employing their own staff.
Rights and Benefits under Self Employment Contract
Services providers do have certain protection and rights which are enjoyed by all. These are as follows;
No discrimination on the grounds of race, sex or disability;
A safe and healthy working environment at client's premises, where applicable;
To be paid at least the national minimum wage free of any unlawful deductions;
Statutory paid annual leave;
Statutory maternity/paternity and adoption pay, subject to fulfilling certain qualifying conditions.
A well-designed contract for service certainly protects your position. Net Lawman provides simple service contracts which ensure proper protection of worker's rights
Can I be Employed and Self Employed at the same time?
You can be employed and self employed at the same time in different jobs, for example if you work for yourself as a hairdresser during the day but in the evenings you work as a receptionist in a hotel, you will be both self employed and employed.
Details in the Contract
Usually, various terms and conditions or clauses are common in self employed contract. However, each contract will be different and will depend on the type of service offered. A good contract should include:
The names and addresses of both service provider and the customer.
The type of service provided.
Territory/geographical coverage
The contractor's status, whether working for an outside agency or not.
Payment terms and frequency of payment.
Pricing adjustment (for example annual increases linked to suitable index)
Term - period of agreement
The date of commencement of the services.
Limitation of liability.
Details on breach of contract.
Prevailing laws
Confidentiality
Renewal of contracts.
Termination of contract and force majeure
Signatures and witnesses
There will always be a number of terms and conditions that will be specific to each service provider. Net Lawman has the largest selection of legal document templates which covers and helps every sort of service provider (for example, self-employed builder, plumber, consultant, roofer, electrician, brick layer etc)
Changing the Service Contract at a Later Date
Original contracts cannot be changed once the terms and conditions have decided among the parties. However, if a service provider wishes to make a change to a contract, it can only be done with mutual consent of the parties. This will be entertained as an amendment to the original contract.
That is why it is important to get qualified advice in drawing up the detail and wording of the contract document, especially if the services contract is of a substantial nature, or carries potentially large liabilities.
Disputes and Breaches of Contract
Disputes may arise over the terms of the self employed contract. If any term of the contract is broken, it will be considered as a breach of the contract, and the matter can be taken to the legal courts. In some cases, the contracts will be the only legally binding record available. Therefore, the self employed contract is the best way to determine the services and expectations between the parties.
Breach of contract must be taken seriously because self employed, under self employment contract, have far fewer employment rights and more financial risk then regular employees. Therefore, it is a wise move for any service provider to take legal advice when drafting any type of contract for services
For the newly self employed person, the range of contracts available can be bewildering. However, Net Lawman has all sorts of sample templates and contract examples which have been drafted by its expert team of Solicitors and Barristers.
