Key legislation for contractors
Anyone working as a contractor could be affected by two key pieces of legislation. Both are outlined below and how they affect you will depend on your status:
This is a piece of legislation that affects all contractors working through their own limited company. Its purpose is to eliminate the avoidance of tax and National Insurance Contributions. If caught by IR35 a contractor will have a higher tax and NI liability. Therefore, it is in most Contractors’ interest to be considered ‘self-employed’.
The Inland Revenue essentially determine IR35 status of a Contractor; they decided whether you are ‘employed’ or ‘self-employed’. To be considered ‘self-employed’ the contractor needs to show that they are in business on their own account and bear the responsibility for the success or failure of that business.
Agency Workers Regulations (AWR)
AWR is a piece of European Legislation. It gives agency workers the right to the same basic working and employment conditions they would receive if employed directly by the hirer, limited to pay and working conditions.
All contractors are entitled to Day One rights as soon as they start work which includes:
- To be informed by the hirer of internal job opportunities
- Access to collective facilities and amenities such as work childcare, canteen facilities, parking and transport services
If a worker is on the same assignment for 12 weeks without breaks they are entitled to the same employment terms and conditions as comparable employees working within the same organisation including:
- Equal pay
- Working hours
- Annual holiday & statutory sick pay
- Any bonus schemes
- Rest break entitlements
- Any other benefits that comparable employees receive
AWR applies to both full and part-time workers; please seek advice on whether you are considered in or out of scope.
Aside from these two key pieces of legislation, you will also need to consider other rules and regulations relevant to anyone. These include VAT and relevant insurance plans.
Before venturing into the world as a contractor you should consult with a specialist in regard to all these issues.