Q from a newbie - Using contractors/freelancers - documentation required?

[EssjDuff]

Good afternoon all

I work for a company that regularly engages self employed contractors/freelancers (mix of Ltd Co's and sole-traders) and am looking to tighten up our processes to protect the contractors as well as ourselves, as we have gone from the odd one or two to a fairly large number. I hope its ok to post here as an organisation rather than a contractor.

I'm a bit lost as to what documentation we need to be issuing/receiving and there doesn't seem to be a definitive answer on the t'internet so I'm hoping people on here can throw their opinions at me!

A bit of brief background - we engage freelancers for specific projects and/or during particularly busy periods (this concerns me - shouldn't it be for specific/timed projects?)

Currently I'm reviewing a new Contract For Services ensuring it has substitution clause (and that it will be invoked/accepted if necessary)
We currently send out a confidentiality agreement (which lasts for 5 years from agreement date?!?! - time period a concern?) - looking to tidy this up and just have it in the contract
We ask for a copy of their PL - do we need to, or can I state that its expected the contractors will have this in the contract?
Our contractors who travel on our behalf are covered by our own travel insurance (CONCERN!!!!)
H&S info (general - our responsibilities to freelancers etc)
Privacy notice specific to contractors

The working arrangements we have is also another concern - I've noticed the freelancers who come in to the office are using our IT equipment (although we have very specific software packages that they may not have so not sure if I'm being overly cautious here, plus there is a client/project confidentiality consideration I suppose), tend to follow our standard office hours, and are here for weeks at a time. It has been mentioned in the past about some having a work email address but I put my foot down on this as it could be seen as integrating them into the business (?).

Sorry I've done a bit of a brain dump there! Hoping for some views, opinions, ideas etc to get me started.

Thanks in advance

Sammy

[Paralytic]

You'll get some good responses here, but if i were running a company and had this coming, i'd be paying for some professional advice.

Companies such as QDOS (i've no connection to them other than they provide my IR35 insurance) can help: Preparing for IR35 Reform - Off Payroll - Qdos Contractor

Do you typically contract people direct or via agencies? If the latter, they may be able to help with contract wording, but, at the end of the day, the buck (and potentially a large tax liability) ends with you.

Remember, its working practices, not just what's written in documents, that feeds into whether someone you engage is a disguised employee in the eyes of HMRC.

EDIT: Another question. What size is your org? See here for why: IR35 in the Private Sector - Off Payroll - Qdos Contractor

[northernladuk]

Hi, no problems asking and with good reason.

You've made some good points there but you've also made some not so good ones and are potentially missing a raft of others.

You do right to have concerns and want to tighten up your process for both you and the contractors BUT you are missing the elephant in the room I am afraid.

The changes coming up in April2020 require you (depending on the size of your company) to make the IR35 determinations for each role and provide a disputes service. Reading in to the above you are no where near ready for that and you should be doing this in the next month to month and half.

I'd strongly suggest you get in touch with QDOS Contractor and get them to help you. They do have a raft of information on their site and looking at Seb Maley's linkedin posts there are detailed calendars on what you should be doing when. I really do think you need to go further than that and maybe engage them on a consultancy basis to help you get at least the basics right. The onus will be on you to determine the role from say, December onwards with the possibility of penalties for getting it wrong.

I think, reading the above, and knowing all the things you missed you really need to speak to them and see which of their services will help you best.

[EssjDuff]

You'll get some good responses here, but if i were running a company and had this coming, i'd be paying for some professional advice.

Companies such as QDOS (i've no connection to them other than they provide my IR35 insurance) can help: Preparing for IR35 Reform - Off Payroll - Qdos Contractor

Do you typically contract people direct or via agencies? If the latter, they may be able to help with contract wording, but, at the end of the day, the buck (and potentially a large tax liability) ends with you.

Remember, its working practices, not just what's written in documents, that feeds into whether someone you engage is a disguised employee in the eyes of HMRC.

Thanks for the quick reply!

Some via agencies and some directly. I am trying to educate people that its not necessarily the written its the actions that will ultimately matter. I feel a bit relieved to have it confirmed that it will require external support, I was wondering if it was something I should know due to my role (HR). Thank you again.

[EssjDuff]

Hi, no problems asking and with good reason.

You've made some good points there but you've also made some not so good ones and are potentially missing a raft of others.

You do right to have concerns and want to tighten up your process for both you and the contractors BUT you are missing the elephant in the room I am afraid.

The changes coming up in April2020 require you (depending on the size of your company) to make the IR35 determinations for each role and provide a disputes service. Reading in to the above you are no where near ready for that and you should be doing this in the next month to month and half.

I'd strongly suggest you get in touch with QDOS Contractor and get them to help you. They do have a raft of information on their site and looking at Seb Maley's linkedin posts there are detailed calendars on what you should be doing when. I really do think you need to go further than that and maybe engage them on a consultancy basis to help you get at least the basics right. The onus will be on you to determine the role from say, December onwards with the possibility of penalties for getting it wrong.

I think, reading the above, and knowing all the things you missed you really need to speak to them and see which of their services will help you best.

Hi, it was actually due to the off-payroll changes coming in to force that made me do a bit more digging about as to how we currently work with our contractors. We are exempt from the new rules but o reason why I can't take this opportunity to review things, besides it may not be long before we aren't exempt so I'm thinking about putting things in place now.

I guess there are two concerns I have - one making sure we are prepared and as I say tighten our processes up and also making sure we are not potentially treating people as workers/employees for employment rights purposes.

What are your views on confidentiality agreements? I have something niggling in the back of my head about excessive timescales invalidating such agreements. Similar with restrictive covenants (supposedly) preventing them from working with out clients directly after they have finished their projects for us, I understand they are a no-no in a true B2B relationship?

[EssjDuff]

And thank you both - have just sent an initial "HELP ME" email to QDOS

What sort of documents do you two get then from companies when working with them just out of interest? Do you always get a contract for services or are some a bit less....umm.... formal?

[malvolio]

Also speak to IPSE. They have some detailed guides on how to approach the whole 2020 issue and how to avoid it properly.

Briefly, it's always about the realty of the engagement. If your freelance is there to complete a given task with a finite end point and nothing else, then you and they are getting it right. Don't get wrapped up with sub clauses or anything else, focus on engaging someone on a pure B2B basis - just like your cleaners and couriers, for example...

[northernladuk]

Hi, it was actually due to the off-payroll changes coming in to force that made me do a bit more digging about as to how we currently work with our contractors. We are exempt from the new rules but o reason why I can't take this opportunity to review things, besides it may not be long before we aren't exempt so I'm thinking about putting things in place now.

Good stuff. You do right to still look in to it to protect the contractors you have and ones going forwards. If you have a mix and haven't looked in to this before I'd imagine not all of them are in a very good position at this point in time. Both from a culture/working practice and contractual position.

I guess there are two concerns I have - one making sure we are prepared and as I say tighten our processes up and also making sure we are not potentially treating people as workers/employees for employment rights purposes.

Which is an issue right now, not just for April 2020. There is always some idiot around that is willing to take you to ET/FTT even before the changes.

What are your views on confidentiality agreements? I have something niggling in the back of my head about excessive timescales invalidating such agreements. Similar with restrictive covenants (supposedly) preventing them from working with out clients directly after they have finished their projects for us, I understand they are a no-no in a true B2B relationship?

I don't see why they are no no in B2B to be honest. You still need to stop other businesses connected to yours passing/re-using information etc. Problem really is how are you going to police it with small one man band companies doing what they want? I'm sure most will sign it and won't give a jot about it to be honest, and if so what are you going to do about it. Next to no contractors have ever been taking to court over things like this. That said, it doesn't mean you should follow proper process and diligence.

Handcuffss have to be explicit and under 1 year to be even close to being enforceable. If you use an agent the handcuff is really to stop them going elsewhere and the agent losing commission. Not sure how a handcuff imposed by the client really works when the contractor is in a relationship with the agency not the client TBH.

But speak to QDOS.... we are obviously biased here as we want you to make it right for us which might not be right for your business.

[EssjDuff]

Also speak to IPSE. They have some detailed guides on how to approach the whole 2020 issue and how to avoid it properly.

Briefly, it's always about the realty of the engagement. If your freelance is there to complete a given task with a finite end point and nothing else, then you and they are getting it right. Don't get wrapped up with sub clauses or anything else, focus on engaging someone on a pure B2B basis - just like your cleaners and couriers, for example...

Thanks! That's what I've been saying, to treat them the same as we would a plumber coming to do a set job. I'm getting push back though as there are times when a certain work area needs additional general resource rather than a specific timed project.

Sounds like I just need some help connecting everything together so I will follow up with QDOS and IPSE as recommended, plus people in here probably more likely to listen to an external consultant, I am well aware they think I'm just being a jobsworth at the minute trying to make their lives harder

[northernladuk]

And thank you both - have just sent an initial "HELP ME" email to QDOS

What sort of documents do you two get then from companies when working with them just out of interest? Do you always get a contract for services or are some a bit less....umm.... formal?

The clue should be in our title of CONTRACTor.
That said there are ton of contractors out there that don't have a clue. We see them pop up on here in trouble because they are not operating properly. Issues with payment and termination because they never got a proper contract, IR35 problems because they have no statement of work and just a job title and so on.

If people want something less than a contract and a detailed SoW for the task to be carried out then they are just making a rod for their own back.