Freelancer, Zero Hours worker… What’s the Difference?

Freelancers and zero hours workers are often see as similar, but it’s important we understand their differences and the implications of these differences from the perspective of small and medium-sized businesses. Nuhman shares his knowledge.

By Nuhman Sharif

These days, many businesses are under considerable pressure and in order to remain afloat and keep costs down, they have to make innovative decisions such as deciding to bring in freelancers to deliver their strategic business goals.

A freelancer is defined as somebody who is ‘self-employed’, and brought in by a business for the specific skill set they have. A freelancer has a contract for specific services and can either work directly with a business or through some other third party, such as a recruitment agency, Crucially, a freelancer is NOT an employee and as such, is not afforded ‘employee status’. This means that they are not entitled to employment benefits such as holiday and sick pay, and the only obligation the business would have for these individuals was to ensure their health and safety. Freelancers also enjoy considerable autonomy, and have the right to decide when and where they work.

In contrast, if you didn’t want to hire a freelancer, you could choose a zero hours worker instead. A zero hours worker has a contract with a business which does not guarantee a minimum number of hours per week. Crucially, and unlike a freelancer, zero hours workers ARE afforded ‘employee status’, and as such are entitled to numerous benefits such as maternity/ paternity pay, sick pay and even redundancy payments. In fact, zero hours workers are employees in the same way as those on part-time, fixed term or even term time contracts.

However, being an employee means that zero hours workers are bound by the terms of their contract of employment. This means they must report for duty at a specific location, work for a set period of time and carry out a range of duties as defined by the employer, usually outlined in a job description. From the perspective of a small business owner (or somebody with seniority in these businesses), it’s really important to think about what solution is best for your business and to ensure that if you do bring in freelancers, that your documentation makes it abundantly clear that they are self-employed. Failure to do this may mean you’re liable to pay tax or national insurance which defeats the object of bringing in a freelancer!

If you’d like more advice on this, why not contact one of our HR Partners today and they’d be happy to guide you further!