What are the additional costs for the end user if the contractor is deemed employed?
The immediate impact is accounting for payroll purposes for the additional cost of 13.8% employers NIC’s and 0.5% apprenticeship levy on top of the payment to the contactor’s PSC.
Secondary NIC’s cannot be recovered from payments due to employees and the same applies under the new IR35 regime. However, new terms can be agreed with reduced level of fees to reflect this additional cost.
Related FAQs
Normally, once you have submitted the online visa application and paid the fee, you have to attend an appointment to enrol your biometrics and verify your passport within 45 days. This requirement has been relaxed due to the visa application centres being closed.
Now that application centres have mostly reopened, you must book and attend an appointment to complete the application process. However, the Home Office has recently introduced the IDV app which allows applicants who previously gave their fingerprints as part of a previous application since July 2015, to upload a photo electronically. There will then be no need to attend a Visa Application Centre to submit their biometrics. Applicants who are eligible to use this electronic option will be contacted by UKVI.
Employees on any type of employment contract including full-time, part-time, agency, flexible or zero hours and foreign nationals who are eligible to work in the UK on any visa can be furloughed subject to the following excluded categories:
- Anyone who was not employed prior to 30 October 2020
- Anyone for whom you haven’t made a PAYE Real Time Information submission to HMRC between 20 March 2020 and 30 October 2020.
- Employees who are working but on reduced hours or for reduced pay
- Employees currently receiving SSP (see FAQ on SSP and self-isolation below)
- Public sector employees
- Employees of businesses or organisations in receipt of public funding for staff costs (except for those who are not primarily funded by the government and whose staff cannot be redeployed to assist with the Covid-19 response)
Employers had the ability to furlough extremely vulnerable employees who needed to shield.
If your employee is on sick leave or self-isolating as a result of Coronavirus, including as a result of track and trace, they’ll be able to get Statutory Sick Pay, subject to other eligibility conditions applying.
There is no special exemption for them, so they would need to meet the usual requirements to be placed on Flexible Furlough after 1 July 2020. i.e. They had to have been placed on furlough for at least 3 weeks before 1 July. Otherwise, they could not be furloughed.
With the outbreak of coronavirus leading to a requirement for more employees to be working remotely, especially following Government advice that all non-essential travel including to and from work should be avoided, there has been an increased requirement for businesses to be more flexible in their approach to signing contracts.
The traditional approach has been for contracts to be printed and signed with a “wet ink” signature. However, this is not a strict legal requirement in the majority of circumstances and contracts can be formed without this degree of formality. English law recognises that contracts can be formed by electronic means – including the exchange of emails or the typing of a name into a document to signify agreement to it.
Whilst this approach offers a lot of flexibility, more sophisticated electronic signature tools are recommended for important documents, to enable the identity of the signatory to be validated and reduce the possibility of fraud.
If businesses are considering changing their contracting processes because of coronavirus, or because of a general shift towards paperless working, it is important to ensure that proper approval processes remain in place, and to consider whether a software tool should be used to complement them. Systems such as DocuSign are widely used.
There also remain some situations where legal advice is recommended before relying on an electronic signature:
- Where the other party is abroad – as local laws that are different from English law might apply
- If executing a deed – the law requires certain types of document to be executed as a deed (for example, transfers of land and powers of attorney), and the issues around electronic signature and witnessing are more complicated here
You will need to keep a copy of the written agreement for a period of 5 years. If the hours of work change from that which you initially agree, you are likely to need something new in writing to cover each separate arrangement.
You should also keep records of how many hours your employees work and how many hours they are furloughed (i.e. not working). You must keep these records for 6 years, together with a record of the amount claimed, your claim reference number and your calculations.