Hiring a subcontractor


0

I'm currently a one man band in the UK with a few clients. I have a friend who is looking into working in an area which would be beneficial to my business, and which I would potentially have to set up in myself further down the line.

He is currently on an immigrant visa (with definite progression to citizenship) and not able to start a business in the UK - I was wondering if I could offer the use of my company's legal structure and VAT registration to my friend.

What I considered is:

  1. I could invoice his clients on his behalf
  2. I could then pay him minus a small percentage.

Other related things I considered include the fact that he could point some of "his" clients in the direction of some of my products, in which case he could be paid a commission?

Is this kind of thing easily possible? Should he be an employee or a contractor contracted to my company? Are there any important matters I'm not considering? It seems like it should be a fairly simple arrangement.

To begin with, I doubt he'd have much work, and he isn't expecting me to pay him when he doesn't work or bring any money in, does this fall foul of minimum wage laws?

One other potential complicating factor - he is intending to remain employed at his current job while working on this other venture.

Employers Sub Contractors

asked Nov 23 '11 at 01:23
Blank
Neil
125 points

1 Answer


1

Is this kind of thing easily possible?

Yes, except...

Should he be an employee or a contractor contracted to my company?

How can he be a contractor if he can not run a busniess? ;) This is the catch - to bea contractor he has to basically run a business. if that is not allowed, he has to be your employee, with all legal implications. So your small fee is quite high.

Are there any important matters I'm not considering?

Employment law which may or may not (depends on your country / legal side) can have implications for you (like sickness pay etc.).

To begin with, I doubt he'd have much work, and he isn't expecting me to pay him when he
doesn't work or bring any money in, does this fall foul of minimum wage laws?

Likely it falls under this. It alo raises the question where he works now - if that is side work, he may not be allowed to be your employee, too.

One other potential complicating factor - he is intending to remain employed at his current
job while working on this other venture.

Which means he should have to honor his work contract. Now this is now YOUR problem, but it may end with him ending up in court and your customer being in trouble (if his employer claims legal rights on his work which your customer paid for). Needs a legal check.
answered Nov 23 '11 at 02:34
Blank
Net Tecture
11 points
  • Your "except" point is quite a big one which I should have realised. Thanks for pointing out the missing parts of my thought process :) – Neil 9 years ago
  • Depending on visa restrictions, I think your friend could possibly be a self-employed contractor, although this may fall foul of IR35 in the UK. – Yojimbo 9 years ago

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