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Moving a contractor onto an employment contract

If someone has invoiced you as self-employed for years and works like a member of staff, the employment starter pack puts them on a written contract and day-one statement, from £895 +VAT.

Two joiners in work overalls going over a job at a workshop bench

How employment status is decided

Employment status turns on how the work is done day to day. If someone works the hours you set, under your direction, with your equipment, cannot send a substitute and is expected to keep turning up, they are very likely an employee or a worker, whatever their invoices say.

A clause saying they may send a substitute, when nobody ever has, can be set aside as a sham. The Supreme Court held that in Autoclenz v Belcher in 2011.

The questions a tribunal asks

Control

Who decides how, when and where the work is done.

Personal service

Whether they must do the work themselves, or can send someone else.

Mutual obligation

Whether you are expected to offer work and they are expected to take it.

Tribunals also look at whether they are part of the business, who provides the equipment and who carries the financial risk, and weigh the answers together.

What changes when they become an employee

The starter pack covers the documents. Payroll sits with your accountant, and Buzz Accounting handles payroll, pensions and PAYE for businesses that want it.

AreaAs a contractorAs an employee
PaperworkAn invoice, and perhaps an old contractor agreementA written statement of the main terms on or before the first day, and a contract around it
HolidayTime off they arrange and pay for themselvesPaid holiday, including public holidays, set out in the statement
Pay and taxThey invoice and pay their own taxYou run PAYE and National Insurance through payroll
PensionTheir own arrangementAutomatic enrolment duties, assessed from the first day
What they makeThey keep the copyright unless they have signed it overThe employer owns copyright in work made in the course of employment
Your clientsFree to work for anyone, including your customersConfidentiality terms, and restrictive covenants drawn narrowly enough to hold

The years already worked

A contract signed today records the relationship from today, and leaves what the relationship was before unchanged. If the facts show they were an employee all along, their continuous employment runs from when they started, and that date goes into the written statement.

Holiday pay, notice and the tax position for the years already worked are separate questions, and the tax side is one for your accountant. If someone has already brought a tribunal claim saying they were an employee or a worker, see employment tribunal defence. We defend those claims ourselves, at a fixed price for each stage.

A joiner lining up a long timber board in a busy workshop
£895 +VAT, from

The employment starter pack. Subscribers pay from £805.50 +VAT. Several contractors moving onto the same terms is one set of documents. Several sets of terms for different groups of staff is priced separately, and you get the figure first.

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Employment contract and day-one statement

The written statement the law requires on or before their first day as an employee, and the contract around it.

Offer letter

The new terms set out in writing before they agree to move.

Confidentiality and restrictive covenants

For the information and the clients that stay with the business.

Contractor agreement

For the people who stay self-employed, written to match how they work with you.

Employment contracts and written statements are outside the activities the law reserves to authorised firms, so they can be priced as a fixed fee. Work carried out by AD Solicitors carries the full SRA framework, including the compensation fund and the Legal Ombudsman. Work we carry out ourselves does not.

Buzz Legal handles contracts, terms of trade, employment paperwork and dispute preparation. Court work, and the other activities reserved by law, are carried out by AD Solicitors, authorised and regulated by the Solicitors Regulation Authority (no. 8011228), and you are told which yours is before you spend anything. How this works, in full. This is information, not advice on your situation.

Related fixed-fee work

Employment contracts for small businessesThe day-one statement, contract and offer letter, from £895 +VAT.Consultant and associate agreementsFor the people who stay self-employed, with IR35 and ownership covered.A 50/50 shareholder agreementTwo equal owners, and a clause that breaks a tie. From £1,250 +VAT.A disciplinary procedureThe process a dismissal is judged against, in the handbook pack from £1,495 +VAT.Terms and conditions for quotesTerms that go out with the quote, in the £695 +VAT package.Supplier contract reviewA supplier’s terms read and marked up for £249 +VAT.

Common questions

How do I move a contractor to an employee?

Agree the new terms, put them in an offer letter, and give a written statement of the main terms on or before their first day as an employee, with a contract around it. Set them up on payroll, assess them for automatic pension enrolment, and record their start date correctly. The employment starter pack, from £895 +VAT, covers the documents. Payroll and pensions sit with your accountant.

Does their length of service start again?

Not if they were an employee in law all along. Continuous employment depends on the facts of the working relationship, so a new contract does not reset it. Where the history shows employment from an earlier date, that date belongs in the written statement. If they were self-employed in fact until now, their employment starts on the new contract.

Can some people stay as contractors?

Yes, where the work is self-employment in fact. The starter pack includes a contractor agreement written to match how they work with you, including whether they can send a substitute and work for others. The agreement has to describe the relationship as it runs, so the facts and the paperwork need to agree.

Who deals with the tax?

Your accountant. Moving someone onto payroll brings in PAYE, National Insurance and pension duties, and any question about tax for the years already worked is an accounting and tax question. Buzz Accounting handles payroll, pensions and PAYE for businesses that want it. We write the employment documents.

What does it cost?

The employment starter pack is from £895 +VAT, or from £805.50 +VAT for subscribers, agreed in writing before work starts. It covers the employment contract and day-one statement, an offer letter, a confidentiality agreement, a contractor agreement and restrictive covenants. If you also want a staff handbook, the HR policies pack is from £1,495 +VAT.

Tell us who is moving across

The number of people moving, how long they have worked for you, and how the work is done now. You get back a fixed price before any work starts. See the privacy policy for how we use your details.

We reply by email. Nothing is chargeable until you have agreed a scope and a price in writing.

Moving a contractor onto an employment contract

Start the employment pack

From £895 +VAT, agreed in writing before work starts.

Buzz Legal Ltd — business legal services for owners and employers. Court work is handled by AD Solicitors, authorised and regulated by the SRA (no. 8011228).