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Importance of Accurate Documentation - Expert Comments

Just Employment Law
21st Aug 2009

Do you have the right type of contracts for employees? You may have to pay and may or find yourself defending claims that can only be brought by employees

There can be advantages for both businesses and individuals entering into a contract for services (such as self-employed contractor), rather than a contract of service (an employment agreement).

 

The principal advantage for the business may be that the individual will not have certain statutory rights which are only afforded to employees. The principal advantage for the employee may be that costs incurred in connection with the business can be offset against income.

 

However, even if parties intend to enter into a particular arrangement in order to obtain these and other advantages, the parties’ intention is just one of a number of factors that will be taken into account to determine whether or not someone is or is not an employee.

 

If a business gets it wrong, then they may find themselves having to pay tax and national insurance that has been unpaid during the course of the engagement. The business may also find itself defending claims that can only be brought by employees, such as unfair dismissal (and the associated costs and inconvenience), with the potential for significant compensation being awarded to the employee.

 

The importance of accurate documentation, suitably drafted in the first place, and actively reviewed to reflect the actual relationship between your business and anyone it engages (whether as an employee or contractor), should not be underestimated. 

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