The difference between employed, self-employed and freelance grooms
The legal requirements which underpin being self-employed vs employed are vast but not as complicated as you might originally have thought. Here at The Grooms List by Caroline Carter Recruitment Ltd, we don’t pretend to be legal, tax or HR experts on the nuances that surround this subject, but we know people who are and we rely on their expert guidance.
We proudly support Grooms who are looking for full-time employment, those self-employed/freelancing and looking to add clients to their portfolio, or indeed just starting out on either road and wondering how best to proceed. We really can and regularly do help and have many success stories that attest to that. We wouldn’t direct anyone to go one way or another specifically as it is a very personal to each individual.
‘On the payroll’ vs self-employed/freelance
In a recent survey by the office of national statistics, it was estimated that nearly 5 million people in the UK are self-employed. Escaping the 8-5 routines of traditional employment and taking control of your own working life, on the face of it, would seem to offer greater freedom to ‘follow your passion’. Cue the many cheesy YouTube videos starting with a sob story and ending in the bright young (always very attractive) usually American, youth living the jet set lifestyle off selling the dream to others. Anyway, I digress, in the horse world, we live by a different set of rules to most. No two days are ever the same with horses and our full-time roles can be somewhat random in terms of set hours, with horses anything can and generally does happen!
In this article, we attempt to take an objective look at the pros and cons of both employed and self-employed/freelance. We don’t look to appoint a “winner”, just to put forward the case for both sides to give you some things to consider for the future.
What does being ‘on the payroll’ actually mean?
If you are ‘on the payroll’ you are employed and listed with HMRC as a member of staff for that company/employer, and you are protected by employment laws. The employer is required to pay tax and National Insurance contributions on your behalf and then, of course, there is the issue of the workplace pension etc. Deductions/contributions etc will be taken from your gross salary before you receive it and shown on your payslip (you do get a payslip right?). As an employee of that business you will have signed a contract that amongst other things states your agreed wage, working hours, holiday entitlement, work expectations and code of conduct (you do have a contract/letter of agreements right?).
The pros of being employed and ‘on the payroll’.
- Paid holiday
- Paid sick leave
- Paid maternity leave
- Reliability of income
- A salary package that includes reduced or even includes accommodation with some/all bills paid
- Often cheap or free livery for your horse and possibly lessons
- Perks of the job. Full-time staff members who aren’t paid an hourly wage are usually more likely to be taken to competitions, training, hunting, on fun rides etc
- Equipment for the job and sometimes work clothes are provided by the employer.
- Same people, same horses, same sights, similar routine, every day.
- You are protected by employment laws.
The cons of being employed and ‘on the payroll’.
- Less freedom over your working hours, days off and sometimes when holidays can be taken.
- There is sometimes an expectation you will work overtime and are on call 24/7 especially when you live on site
- Wage increases are often modest and not always “a given”.
- Same people, same horses, same sights, similar routine, every day.
What is the difference between ‘self-employed’ and ‘freelance’?
First of all, in the eyes of the HMRC, ‘self-employed’ and ‘freelance’ are actually the same thing. If you believe you are currently self-employed/freelance there is some legislation which will help you decide if you genuinely are self-employed or actually employed/’on the payroll’ which is worth looking at https://www.gov.uk/employment-status/selfemployed-contractor. In short, your employment status is linked directly to the employee’s tax status – either the employer pays an individual’s National Insurance and Income Tax or the employee does. The confusion tends to come when NEITHER pays it.
Legally, a groom who has registered as self-employed is free to hire themselves out on a freelance basis, hence the term ‘Freelance Groom/Rider’, and rather than have “employers” they have “customers” or “clients”. There is a range of options for self-employment – you can choose to split your time between several retained part-time positions, or you can work on a more ad hoc basis between many yards, offering flexi-hours or taking on a string of temporary contracts – therefore you would be classed as working Freelance.
You can be self-employed and work for just one person, but there is a list of criteria you need to comply with to ensure this is legal and you don’t land in hot water. Please follow the various pages linked here for guidance!
The pros of being self-employed/freelance
- Freedom and flexibility to organise your working hours around other life commitments e.g. – partners, children, hobbies, studying, holidays, competing your own horse etc.
- Freelance grooms can usually secure a higher hourly wage but HMRC deductions need to be factored into this for actual take-home pay calculations.
- You are paid by the hour so any overtime is easily identified and therefore chargeable.
- When calculating your tax liability, it is possible to claim back any work clothes, and some car expenses as part of your ‘business costs’.
- Variety in your work yard to yard and sometimes even discipline (different disciplines come into/out of season).
The cons of being self-employed/freelance
- The responsibility for marketing yourself well, securing regular work and proving yourself worth the price tag you set lands solely with you. Employers can be much fickler with freelancers so you have to be good to get the work.
- It is necessary to budget yourself smartly as a freelancer, allowing for quiet periods and loss of earnings if you are off sick for any time, injured or planning to take holiday.
- Due to the fact you are paid hourly, speed is of course expected. Often it may seem that employers work to a different clock to you and the list of expectations can be high and this can result in conflict which, fair or unfair, can result in less than ideal references which can affect your business prospects
- Unless you are self-disciplined, admin and record keeping can be a bind and will add the hours you actually work and you won’t get paid for doing this in working time!
- The improved work/life balance you chose self-employment so you could enjoy can, in reality, be hard to achieve. Extra admin/paperwork and saying ‘No’ to work with no certainty they will ask again when you are quieter can be a constant worry.
- Inconsistencies in income.
- Your working arrangement is an agreement between you and your “client” and you do not benefit from the protection an employed receives through employment laws, meaning that disputes are a “civil matter”. In the event of a dispute, you will need to hire a solicitor to take legal action against your “client” rather than take your employer to a tribunal under employment laws.
There can, at times, be some confusion over which of these employment status applies to you. Remember, to count as self-employed you need to have choice over when and where you work and should be paid an hourly wage according to an invoice that you present to the employer weekly or monthly.
It is possible to be both self-employed and on the payroll if you have a part-time contracted regular position with a yard and they have enlisted you to their payroll. This would require them to pay your income tax and NI contributions for the hours you work for them. You would be free to take on freelance work elsewhere for the rest of your time provided you are registered as self-employed and you file your self-assessment tax return accordingly for those extra hours.
Some ESSENTIALS for the self-employed/Freelancer
- Do not try to dodge the tax man. As soon as you decide the freelance life is for you get an accountant and take their advice very seriously, which may include heading on over to the HMRC website to follow this simple process to register as self-employed.
- Be meticulous with keeping records! These should be organised, thorough records of all work done, purchases and expenses e.g. cash taken, invoices, mileage, receipts (inc fuel) and bank statements etc.
- Don’t miss tax deadlines! The tax year runs from April 6th to April 5th each year. Paper self-assessments are due the following 31st October, and online submissions are due the 31st January. HMRC have now brought out a series of helpful videos to explain the whole process.
In deciding what is right for you, it is always important to take into account where you would like to see your career going long term and then look back at the building blocks, which are the jobs/experiences/skills you need to get you there. Are they best served within a structured team focussing on one discipline, or sole charge on a family type yard or by freelancing moving from one yard/discipline/job function to another? Before making any rash decisions be honest with yourself, do your market research and ensure if you go the self-employed route that you can generate the kind of wage you might need whilst dealing properly with the financial/administrative responsibilities that go with that.
Ultimately, whether to go self-employed or on the payroll is a very personal choice. It doesn’t always just come down to what is the best decision financially. Similarly, if you go the employed route, will you really get what you want from remaining with one yard/employer or are you restricting yourself and your career?
If you are unsure about what’s right for you, do give Caroline Carter a call today 07747 686118 for some FREE, NO OBLIGATION and knowledgeable advice from someone who knows the industry inside out; she will happily help you to review your options impartially, or help you to give your freelance business a boost in your preferred location. Alternatively, if you aren’t already, register yourself and your business on the website www.thegroomslist.co.uk. The Grooms List includes job vacancies for employed and self-employed grooms with lots of happy stories from both sides.