Becoming an employer for the first time

One way your business can take advantage of extra skills and labour without taking on many of the responsibilities of an employer is to use freelancers or outside contractors.

These are workers who are self-employed or belong to separate outside companies.

For example, you might use an outside IT contractor to build your business web pages, or hire a freelance PR consultant when you want a promotional push for your business.

Advantages and disadvantages

An advantage of using freelancers and outside contractors is that in many cases they look after all their own income tax affairs and National Insurance contributions.

It's always a good idea to check that you won't be responsible for deducting tax and National Insurance from their payments.

People who are genuinely self-employed may not be entitled to the same rights afforded to employees. Depending on the contract under which they are providing services, they may qualify as workers.

Under these circumstances they would be entitled to workers' rights such as holiday pay. If you are in any doubt about a person's employment status, you should get professional advice.

Freelancers and contractors still have a right to the National Minimum Wage. If they are being paid by their own firms, this will not affect you.

As an employer, you still have responsibilities for freelancers' and contractors' health and safety and check whether your insurance is affected by having non-employees working on your premises.

Remember that you should avoid discrimination against anyone who carries out work for you, whether they are employed by you or self-employed.