Employment Contract Law - Private Hire
Discussion
As many of you will know, I'm running a Taxi firm in Kent. Things are going extremely well and we are already at the point where we need to think about additional recruitment 
We do have a couple of problems though and I'm looking for a bit of advice.
The way things are set up in the industry, drivers as a rule are self-employed. As they are self employed they sort out their own N.I and Tax payments, leaving us to deal with the remaining percentage of their takings (typically about 40%). The drivers use our vehicles and fuel, and are insured by us. That means all they need is a licence to operate , and this costs them around £200 to get all set up.
We have managed to de-skill the role of driver to the point that a complete fresh starter can pick up the job instantly... all with the help of SMS and Sat-nav!
That means we can take on people without the experience and train them up. Problem is, a lot of people who would love a chance to become a cab driver (there is bloody good money in it) can't afford the initial outlay of £200.
We would like to pay this for them, but then how the hell do you protect against them going to work for the competition straight after getting them the license? They wouldn't have an awful lot to gain from it, but I would hate to shell out only to lose my new recruits straight away
I guess my question is really, can we protect ourselves with any kind of contract or training debt scheme when the chaps are self employed?
Cheers
Dave
We do have a couple of problems though and I'm looking for a bit of advice.
The way things are set up in the industry, drivers as a rule are self-employed. As they are self employed they sort out their own N.I and Tax payments, leaving us to deal with the remaining percentage of their takings (typically about 40%). The drivers use our vehicles and fuel, and are insured by us. That means all they need is a licence to operate , and this costs them around £200 to get all set up.
We have managed to de-skill the role of driver to the point that a complete fresh starter can pick up the job instantly... all with the help of SMS and Sat-nav!
That means we can take on people without the experience and train them up. Problem is, a lot of people who would love a chance to become a cab driver (there is bloody good money in it) can't afford the initial outlay of £200. We would like to pay this for them, but then how the hell do you protect against them going to work for the competition straight after getting them the license? They wouldn't have an awful lot to gain from it, but I would hate to shell out only to lose my new recruits straight away
I guess my question is really, can we protect ourselves with any kind of contract or training debt scheme when the chaps are self employed?
Cheers
Dave
The trouble is, if you inserted some type of retention clause in the contract, the Revenue might use that as a weapon against you if they tried to claim that these individuals should really be employed.
Even making the offer to them of paying for the training could be construed as part of an "employment" contract. It is not mormal for Non-Employers" to pay for the training of "self-employed" individuals they use.
Even making the offer to them of paying for the training could be construed as part of an "employment" contract. It is not mormal for Non-Employers" to pay for the training of "self-employed" individuals they use.
Eric Mc said:
The trouble is, if you inserted some type of retention clause in the contract, the Revenue might use that as a weapon against you if they tried to claim that these individuals should really be employed.
Even making the offer to them of paying for the training could be construed as part of an "employment" contract. It is not mormal for Non-Employers" to pay for the training of "self-employed" individuals they use.
Even making the offer to them of paying for the training could be construed as part of an "employment" contract. It is not mormal for Non-Employers" to pay for the training of "self-employed" individuals they use.
That was another thing I was worried about. Surely there must be some way around it
Maybe I'll ask the council if they will put a restriction on the drivers licence... ie: if we pay for it, they are only licensed to drive a Longley's car. If they want to change they then need to pay again?
It's a poser that's for sure... And thanks for raising the point.
The essence of being "self-employed" is the freedom to take your business wherever you want to. Trying to restrict the activities of a self-employed business you use is counter intuitive.
Being able to hire people ona "self employed" basis brings very good tax and NI advantages for you. That's one of the plus points. A minus point is that you have limited control over what these self-employed individuals do.
Being able to hire people ona "self employed" basis brings very good tax and NI advantages for you. That's one of the plus points. A minus point is that you have limited control over what these self-employed individuals do.
Eric Mc said:
The essence of being "self-employed" is the freedom to take your business wherever you want to. Trying to restrict the activities of a self-employed business you use is counter intuitive.
Being able to hire people ona "self employed" basis brings very good tax and NI advantages for you. That's one of the plus points. A minus point is that you have limited control over what these self-employed individuals do.
Being able to hire people ona "self employed" basis brings very good tax and NI advantages for you. That's one of the plus points. A minus point is that you have limited control over what these self-employed individuals do.
Could I hire them on a contract rate for a short time? And then give them the option to go self employed? That could be an option, but then I may cancel out the £200 by having to make NI contributions over that period.
Basically, is it just a risk I would need to take or is it worth looking at these other options, ie: employ them for 3 months and then let them go self employed? I rather think that would take the attraction out of the job for a lot of these guys.
Once again. Cheers
If you actually employ someone (and deduct PAYE and NIC etc) and then let them go and then rehire them immediately as "self - employed" you are, in effect, waving a massive red flag at the Revenue saying "come and look at my records and methods".
I really wish the term "self-employed" had never been coined. It actually doesn't make any sense. In tax law, the actual term used is "Sole Trading" which is a much more accurate description of a person's status.
I really wish the term "self-employed" had never been coined. It actually doesn't make any sense. In tax law, the actual term used is "Sole Trading" which is a much more accurate description of a person's status.
Eric Mc said:
If you actually employ someone (and deduct PAYE and NIC etc) and then let them go and then rehire them immediately as "self - employed" you are, in effect, waving a massive red flag at the Revenue saying "come and look at my records and methods".
I really wish the term "self-employed" had never been coined. It actually doesn't make any sense. In tax law, the actual term used is "Sole Trading" which is a much more accurate description of a person's status.
I really wish the term "self-employed" had never been coined. It actually doesn't make any sense. In tax law, the actual term used is "Sole Trading" which is a much more accurate description of a person's status.
Well everything is up straight and above board. We're probably pretty rare in this game but we're running a completely legit business here. Everything is declared from our point of view. It's just that the drivers income is up to them to declare, over which we have no say how they run their own 'business'. Yes 'Sole Trader' would be a much more accurate way to describe them.
So if they are a sole trader, and classed effectively as a business, what is wrong with 'reserving their services' for a certain length of time?
Or is this actually illegal to swap someones status for a tax reason?
Cheers.
Muncher said:
Why not just make them a loan of £200 when they start which is repayable on certain terms with a small amount of interest?
How would you set this up though? Do you not need to be licensed as a money lender?
These 'cheques cashed' shops do seem to spring up all over the place though.
Hi David, I have been in the same situation and I play it this way:
Our drivers have to pay into a 'bond' which technically covers the cost of the 'private hire/taxi' license, the insurance excess and a 'tyre' fund. At the end of every year this gets repaid to the guys ( minus any damage costs ) as a sort of Xmas bonus.
As you say most guys will want assistance in obtaining a 'badge' so I incorporate that cost into our 'bond' system by deducting a percentage of takings each month, before any cheques are issued for work done. I would imagine for you it could be slightly different as your drivers will be taking the customer payments and giving you a percentage.
Maybe if you want to drop me a mail/call offline I can be of help.
Nigel
Our drivers have to pay into a 'bond' which technically covers the cost of the 'private hire/taxi' license, the insurance excess and a 'tyre' fund. At the end of every year this gets repaid to the guys ( minus any damage costs ) as a sort of Xmas bonus.
As you say most guys will want assistance in obtaining a 'badge' so I incorporate that cost into our 'bond' system by deducting a percentage of takings each month, before any cheques are issued for work done. I would imagine for you it could be slightly different as your drivers will be taking the customer payments and giving you a percentage.
Maybe if you want to drop me a mail/call offline I can be of help.
Nigel
bmwdrivernigel said:
Hi David, I have been in the same situation and I play it this way:
Our drivers have to pay into a 'bond' which technically covers the cost of the 'private hire/taxi' license, the insurance excess and a 'tyre' fund. At the end of every year this gets repaid to the guys ( minus any damage costs ) as a sort of Xmas bonus.
As you say most guys will want assistance in obtaining a 'badge' so I incorporate that cost into our 'bond' system by deducting a percentage of takings each month, before any cheques are issued for work done. I would imagine for you it could be slightly different as your drivers will be taking the customer payments and giving you a percentage.
Maybe if you want to drop me a mail/call offline I can be of help.
Nigel
Our drivers have to pay into a 'bond' which technically covers the cost of the 'private hire/taxi' license, the insurance excess and a 'tyre' fund. At the end of every year this gets repaid to the guys ( minus any damage costs ) as a sort of Xmas bonus.
As you say most guys will want assistance in obtaining a 'badge' so I incorporate that cost into our 'bond' system by deducting a percentage of takings each month, before any cheques are issued for work done. I would imagine for you it could be slightly different as your drivers will be taking the customer payments and giving you a percentage.
Maybe if you want to drop me a mail/call offline I can be of help.
Nigel
Yeah, you've actually got it spot on. Trouble is, our cash seems a bit more fluid than yours. By that I mean that we get it in as the work is done (more or less) and pay the drivers account work in advance of invoices being paid. Keeps the drivers happy as they aren't forever worrying if XYZ has been paid and negates the need for a payslip or waiting for a cheque to clear etc.
Most cab drivers look at the end of their nose when it comes to money, so if they had to wait for their cash, they just wouldn't bother
Hi Dave
Yes we are in exactly the same situation with regard to needing to give new drivers a 'leg up' initially. However you are right regarding not being able to set up a non-solicitation type clause in any contract or agreement with drivers. In fact it is very hard to enforce with true employees let alone the self employed.
Nigels bond idea or some other sort of loan scheme is the answer.
Incidentally I am interested exactly how you deal with the account element of your turnover with self employed drivers. I'll email you to avoid any unwanted attention!
Yes we are in exactly the same situation with regard to needing to give new drivers a 'leg up' initially. However you are right regarding not being able to set up a non-solicitation type clause in any contract or agreement with drivers. In fact it is very hard to enforce with true employees let alone the self employed.
Nigels bond idea or some other sort of loan scheme is the answer.
Incidentally I am interested exactly how you deal with the account element of your turnover with self employed drivers. I'll email you to avoid any unwanted attention!
RedCabbage said:
Hi Dave
Yes we are in exactly the same situation with regard to needing to give new drivers a 'leg up' initially. However you are right regarding not being able to set up a non-solicitation type clause in any contract or agreement with drivers. In fact it is very hard to enforce with true employees let alone the self employed.
Nigels bond idea or some other sort of loan scheme is the answer.
Incidentally I am interested exactly how you deal with the account element of your turnover with self employed drivers. I'll email you to avoid any unwanted attention!
Yes we are in exactly the same situation with regard to needing to give new drivers a 'leg up' initially. However you are right regarding not being able to set up a non-solicitation type clause in any contract or agreement with drivers. In fact it is very hard to enforce with true employees let alone the self employed.
Nigels bond idea or some other sort of loan scheme is the answer.
Incidentally I am interested exactly how you deal with the account element of your turnover with self employed drivers. I'll email you to avoid any unwanted attention!
Ok mate. Very simple. Give me a shout
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