Employment Contracts Vs Consultancy Agreements - The Pros & Cons

Employment Guides & Advice

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How To Staff Your Business

One of the many important decisions for any start-up company or one in the early days looking to grow is how to staff your business. There are different options available to you, so do you employ a member of staff or use a consultant?

Employment contracts v consultancy agreements - the difference between the two

Employment contracts set out the terms on which a company wants to employ a person. This is usually with a view to employing a person on a long term permanent basis, unless you use a fixed term contract for a specific project or tasks to be delivered over a fixed period of time.

Consultancy agreements set out the terms on which a company wants to engage a person to deliver services for the company. Consultancy arrangements are usually temporary in nature and relate to the delivery of specific services, projects or tasks.

There are a number of differences between the two, but some of the important differences for a company when deciding which is the most appropriate to use are:

  • Duties: an employee can be instructed to carry out a number of duties that are reasonable and within the employee’s remit/job description. Whereas a consultant will usually carry out very specific tasks in which he/she has expertise.

  • Control: a company can exercise a greater level of control over what an employee does. Whereas a consultant is expected to deliver the services using his/her own skill, in their own way and often in a time scale chosen by the consultant.

  • Hours of work: an employee’s hours of work are usually set by the employer over a set number of days per week. However, a consultant will usually carry out the services in their chosen timescale, but often with a dedicated number of hours/days per month.

  • Equipment: an employee will usually use the employing company’s equipment. Whereas a consultant will often provide his/her own equipment.

  • Tax: an employee will usually be paid through a PAYE system where appropriate deductions for tax NICS will be made. A consultant on the other hand will be responsible for his/her tax arrangements and he/she may charge VAT.

  • Mutuality of obligation: employers are obliged to offer work to the employee and the employee has to accept it and do the work. Whereas consultants have more freedom to pick and choose the work that they accept.

  • Exclusivity: employees are usually prevented from working for other companies or indeed themselves whilst employed. Whereas consultants will usually be able to work for other companies during the period of engagement with your company.

There are of course other differences, but these are some of the more pertinent considerations.

Which arrangement should you choose?

This is an important decision and the choice will usually depend on a number of factors such as, expertise already within the company; money available to pay a salary or fees; and how much control you want to exercise over those joining the company. It is common for consultants to cost more in the short term because they usually bring an expertise and they do not acquire some of the employment related rights (such as holiday pay, pensions and Statutory Sick Pay).

For technology based companies intellectual property (and how you best protect it) will also be a major consideration whether you choose to employ or engage with people to grow your company.

Whichever arrangement you decide on, it is important to ensure that the relationship is correctly documented in order to protect the company moving forward. Failing to put in place employment contracts or consultant agreements can lead to legal and financial risks in the future, so it is recommended you take advice on both the appropriate choice of arrangement and content of the contract or agreement.

For more help and guidance on the topic, please get in touch to find out more about the fixed fee services that we offer.

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Emma is an experienced employment lawyer acting for a range of clients including public sector, manufacturing and engineering, care providers, and insolvency practitioners.

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Employment Contracts

Our team is on hand to support your contractual needs with precision.

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Free Guide

The menopause in the workplace –
how best to support staff and our fixed fee policy package

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As the population in general gets older, employers are having to deal with many issues linked to having an older workforce.  One of these issues is the menopause and the difficulties it can cause for staff who are going through it.

Employers have typically been slow to recognise the issues faced by menopausal women, and many women feel uncomfortable discussing it, as it is often seen as a taboo subject.  However, acknowledging these difficulties and assisting women to remain in work in spite of them, will be a significant factor in retaining female staff in this age bracket. Retention of experienced staff (whatever gender) is vital in avoiding the loss of key skills and experience from the organisation. Retention of older female staff can also have benefits in addressing the gender pay gap.

Menopause: The facts

The menopause is a natural stage of life for women, usually in their late forties/early fifties, although it can also happen earlier or later. Part of the process includes the “perimenopause” which is when a woman's body is starting to change.

There are many symptoms of the menopause including: hot flushes; difficulty sleeping and night sweats; feeling tired and lacking energy; mood swings; anxiety and panic attacks; difficulty concentrating and focussing; and migraines and other aches and pains.

It is important to note that the menopause affects every woman differently both emotionally and physically. The impact it has on an individual’s health can affect how they work, their relationships with colleagues and has knock-on effects on absence and productivity.

Menopause: The law

The menopause and perimenopause are not specifically protected under the Equality Act 2010. However, if a worker is treated unfairly because of the menopause or perimenopause, this could amount to discrimination because of, for example, their sex; a disability; and/or their age.

  • Sex discrimination - Unfair treatment of a worker because of their sex could lead to a discrimination claim, for example if an employer treats a woman's menopause or perimenopause symptoms less seriously than it would a male worker's health condition when considering a drop in job performance.

  • Disability discrimination - A disability is a physical or mental impairment that has a substantial and long-term adverse effect on a person’s ability to carry out normal day-to-day activities. This is a broad definition and a worker's menopause or perimenopause could potentially be regarded as a disability by an employment tribunal. If a worker has a disability, an employer must consider making changes to reduce or remove any disadvantages the worker experiences because of it (i.e. reasonable adjustments).

  • Age discrimination - Workers are protected against unfair treatment because of their age. This may include unfair treatment of workers because thy are going through the perimenopause or menopause.

In addition, the Health and Safety at Work Act 1974 says an employer must, where reasonably practical, ensure health, safety and welfare at work.  An employer must minimise, reduce or where possible remove workplace health and safety risks for workers. This will involve carrying out a health and safety risk assessment with a view to ensuring menopausal symptoms are not made worse by the workplace and/or its work practices, and making changes to help a worker manage their symptoms when doing their job.

Menopause: Your questions answered

Our fixed fee menopause policy

We’re offering a fixed fee menopause policy drafting service. For a fixed price of £950 plus VAT*, our team of experts will prepare a bespoke menopause policy for your business. This includes:

  • A consultation to determine the best approach for your organisation and employees

  • Advice from a dedicated team of experts who will work with you to create a policy unique to your organisation and its ethos

Outside of this fixed fee package, our team of employment law experts are also on hand to work with you once you have your draft policy prepared, including:

  • Consulting with employees, staff associations and unions

  • Advising on how to communicate with staff about the menopause policy

  • Evolving your menopause policy in line with Government policy changes and other developments

Get In Contact

Helen is an experienced employment lawyer, who works proactively with clients to identify solutions to complex HR issues. Helen has worked with a number of client to implement a menopause policy across a variety of sectors.

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Our team is on hand to support your contractual needs with precision.

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