David Borge Practice Director
Consultancy in times of COVID
The COVID-19 pandemic has, for the time being at least, changed the way that we live and work.
Time will tell what long term effects the pandemic will have on our commercial and employment landscape but in the meantime, businesses are now reevaluating the way that they organise their workers, who are now also seeking to shift into safer, more convenient and also more productive work patterns.
An increasingly attractive option for many businesses is to use consultants for specified pieces of work as an alternative to going down the employment route. Although the consultant will, for the most part, not be able to benefit from the protections afforded by statutory employment law, they will be able to enjoy the flexibility of working on their own terms and be able to utilise certain tax advantages (i.e. by consulting via a self-owned service company).
Clearly consultancy is not for everyone, but for those (including existing employees) considering the route, consultants and, more importantly, businesses need to ensure that their agreed contractual terms reflect the status of the worker as a consultant rather than an employee.
The consultancy agreement will need to be carefully drafted to ensure that the consultant is:
- paid on production on invoices rather than on a regular salary through the usual payroll;
- not overly limited in the manner in which, and hours within, they work;
- able to take on work with other clients;
- not paid sick leave or annual leave;
- not subject to a non-solicitation clause following the end of the consultancy agreement;
- allowed to provide a substitute to provide the services on a general and unqualified basis; and
- not entitled to incentives that would normally be given to a business’ employees e.g. pensions, bonus share options etc.
It is important to note that the above list is not exhaustive, is subject to other variables such as case law and that the determining factors do depend on the individual circumstances of the working arrangement. For more detailed advice, please contact our Employment Team at firstname.lastname@example.org.