[NW Cleaning]

Hi All,

I am in the process of planning my startup cleaning agency, but I am having trouble getting my head around the whole self employed vs employed cleaner thing..

I.e.  I am an agency so I find cleaners and then match them to suitable clients and agree on the hours each week.   I take a monthly fee for 'managing' the cleaners and providing insurance.   The cleaners are paid directly by the client.

Apparently HMRC are really clamping down on the self employment issue and my fear is that I am not doing everything legit.   Reading online there is a calculator which helps you decide the self moloyed or employed status, but when i put in what i think applies it throws up a calculation that the cleaner is employed and NOT self employed!

How do I cover myself?

Looking at franchises they all seem to work on an agency basis, so maybe I am over analysing things...

[Griffus]

No offence but you seem to be setting your sights a bit high.

To set up as an Agency you will need to be red hot on many aspects of not only employment law, but also business and contract law also.

Cash Flow will also be a nightmare for you as you'll most likely pay weekly but be paid monthly in arrears, e.g.: -

Cleaner earns £7 ph
Employment costs + approx 18% = £1.26
Total cost to you for Cleaner = £8.26
You charge £10 ph
Cleaner works 20 hours per week, total cost = £165.20
You pay one week in arrears
You invoice monthly
Your paid one month in arrears
At any given time you will have paid up to 9 weeks x £165.20 (£1486.80) to earn £1800 for the same period.

You'll also be doing well to get £10ph for a cleaner.

This isn't something you should even consider without a solid financial base or backer and plenty of experience.

[NW Cleaning]

Hi Ian.

Thanks for replying.

Maybe I didn't explain myself very well...

What I was meaning is that I will set up my business like the maid2clean, dolly char etc, where they match cleaners to clients.

The clients pay the cleaners directly after each weekly clean and I would charge the clients a monthly fee to cover the insurance and replacement if required etc.

I.e. cleaner is paid directly £7 per hour and I charge a monthly fee of £3 for however many hours, ideally to be paid monthly by standing order or invoice.

This appears to be the way a lot of the large companies operate, but I am curious about how they get around the cleaners being self employed... HMRC are getting a but stricter with making sure the cleaners really are self employed and thisint being used to get around employment law etc.

Basically, what I am asking is how to I protect myself as much as possible against Hmrc turning round and saying the self employed cleaners should really be fully employed by me and subject to PAYE/NI.

Thanks

[Griffus]

If they only work for one client then they can't be deemed as self employed. Likewise if a very large percentage is for one client the same can apply.

This was brought in to protect workers from unscrupulous 'employers' that wished to avoid their obligations in respect of holiday pay etc.

I'm a bit rusty on this but was involved around the time this came in a few years back so will look back through old documents if I get chance.

[NW Cleaning]

Thanks Ian, appreciate it.

I knew I had heard something along the lines of what you ave said.  I would love to know how the big companies, maid2clean, dolly char etc get round this issue...

I presume the contract between all parties must make it very clear that the cleaner is fully self employed and responsible for own tax/NI etc. 

Thanks again!

[Ian Gourlay]

This is a question that has occur ed several times and although I have ot looked at this section much over past two years I have never found the answer

You are trying to do what some Franchise Companies do and avoid joining a Franchisor

I think your best bet would be to go to an employment lawyer and take along details of the different schemes

When Select Team  first started it  was more like but a manual type operation to in out how but has now developed into a Franchise

Again I have never found a credible guide on Ebay  or Amazon explaining this system

If you get answer you could tell the rest of us but I bet you do not especially if you have to pay to find out

All the best

[pristineclean]

This is a very interesting topic for me - the biggest problem, although not insurmountable, is that the test for self employment varies according to whether one is looking at the employment relationship according to employment law or whether the HMRC tests are being applied.

I've read fairly extensively on this subject (although my core specialities are TUPE and unfair wage deductions, all questions on those topics more than welcome  ) and I'm more than half tempted to provide the 500 words or so which would answer the challenge in Ian's post but as with everything else in employment law, it's generally much more about specific facts than law generally so wouldn't be applicable in every case.

I suspect that with the majority of franchises, work is given to an entity, which  can be a sole trader, partnership or limited company, which is then free to have that work carried out by any individual. This is known as the substitution clause and is generally sufficient to confer self employment status on either employment law or HMRC principles. In addition, there is likely to be no mutuality of obligation (work doesn't have to be offered or accepted) which would also generally be sufficient although in many cases the lack of mutuality of obligation won't be enough since HMRC could infer a 'zero hours' contract and apply tax responsibility accordingly.

[greg2040]

I have just been through this process myself. After speaking to countless solicitors, employment law specialists and business consultants I have finally got an answer and what appears to be a solid contract to protect the business. This is I assume the same solution the big franchise companies come up with. As with any contract the only guarentee it is watertight is if taken to court however the person I decided to use for the contracts appears massively knowledgable in this area and did his masters degree in employment law.

I am normally all for sharing on forums however (without sounding too tight) this is something which has come at great cost (both from a time and monetry point of view). If you are serious about setting up you need to get it right from the outset as any problems down the line could cost a fortune not to mention distroy your business.

If you are interested, I would be more than happy to share my experiances, contact who I have used for my contracts and copies of all contracts to protect you. However it will come at a cost (and help me recoup some of my costs). If your interested feel free to get in touch.

[Michelle F]

I asked this same question myself a few months ago. I checked with some solicitors and it was possible but with very good contracts.

I have decided to go down the employment route instead and took on my first employee in September. This obviously avoids the need to watertight contracts and for concerns over responsibilities for paying tax. My employee is doing this as her second job so she is on BR tax code meaning I am making contributions to HMRC on her behalf.

I felt by having her as my employee rather than sub contracting the work, I would be able to retain complete control over how things are done. After all, it's my business so I want things done my way.

There were a few H&S issues to contend with and a bit of a performance getting things sorted with HMRC but now everything is set up, it's easy to run. She's on a zero hours contract so if we have no work, I don't pay her, although she has had work every week so far.

So my point is, could you/would you consider an employee?

[Ashley Brothwood]

Do you know how easy it is to set up a PAYE system how do you get started? I would probably go down the same route and employ someone on a zero hour contract to cover us if we didn't have the work but hopefully we'll have enough work each week.