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Date posted: 14th February 2020
With the employment landscape changing rapidly in the UK, employing staff on the right type of contract will have a lasting impact on your business. Here is a quick reference guide which could set you on the right path, whether you are starting a new business or looking to take a fresh approach to structure your workforce.
Here in the UK, we have a relatively distinct set of contract types which are recognised by HMRC when it comes to employee taxation. This, we believe is an important consideration when setting up new employee contracts, but not the only consideration when setting up employee contracts.
These are essentially permanent positions and will carry with them a set of responsibilities for the employer and subsequent cost associated with them:
Most full-time contracts are for 35 hours per week and for part-time, less than this but can vary depending on the type of work or role.
Key takeaway: It is becoming more commonplace (particularly in the public and third sectors) for employees to job share, meaning two part-time employees share what the employer considers a full-time role.
This type of contract is usually adopted to approach a couple of core scenarios—when maternity leave is required or to deliver a specific project within an organisation. This type of contract is ideal when the delivery of a key business requirement requires a key skill or additional cover when organisations need to scale up quickly and with a defined goal in mind.
Key takeaway: Employees on fixed-term or temporary contracts are entitled to the same benefits as full/part-time employees, which needs to be taken into consideration when adopting this route.
Usually self-employed, the contracts for freelancers, consultants and contractors can vary widely and provide great flexibility to organisations who want to employ a specialist for a short period of time. Contracts usually have a start and end date, or they may be contracted until project completion. Taxation and National Insurance contributions are the responsibility of the contractor and not the employing organisation.
Key takeaway: These contracts are only really suitable for specific projects in organisations, otherwise the employer may be liable for the contractors’ taxation and National Insurance contributions.
This type of contract is usually agreed and managed by a specialist recruitment/employment agent. Usually temporary in length, the rights of the employee, National Insurance Contributions and SSP are the responsibility of the agency and not the employing organisation.
Key takeaway: A key factor to bear in mind is the ‘12-week rule’, which effectively means that the agency worker has the same rights as permanent employees in the organisation after a 12 week period.
Zero-hours contracts are considered one of the most flexible forms of contract for both employer and employee. Often maligned, zero-hours contracts can prove a beneficial option for each party. With no set number of hours agreed, employers will usually ask the employee to work when required and it is up to the employee whether or not they want to work these hours.
A good example of where this works well is in the peer-to-peer economy, in business models such as Uber or Just Eat delivery.
Key takeaway: Zero-hour contract employees are entitled to similar benefits to that of a permanent worker and the employer must pay at least the National Minimum Wage.
Looking for more advice on the contracts for your business is essential to making the right choices when considering contracts. Here at Kingswood Group, we work with businesses and organisations of all shapes and sizes, advising on all types of HR and employment matters. We would be pleased to offer a no-obligation consultation on employee contracts, so do please get in touch.
For a confidential chat about what HR Solution (Recruitment, Outsourcing or Consultancy) you’re looking for and how we can help, please contact us by phone, email, social media channels or by submitting your details below.
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