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My girlfriend is a junior graphic designer working for a small company of three people: herself, her boss, and a senior designer.

When she got the job, her boss told her that she'd be "freelancing" for the first three months, and if it worked out then she'd be full-time employed after that. However, the three months are now up and her boss has changed his mind and told her that she'd have to stay on as a "permanent freelancer", so that he wouldn't have to pay as much tax.

What this means is that she has all of the downsides of freelancing:

  • No contract of employment
  • No job security or notice period
  • No sick pay or holiday pay

With all of the downsides of full-time employment:

  • Inflexible working hours
  • Office environment with commute
  • No choice of what she will work on

The job market for junior designers is completely saturated here in London - employers can basically do what they want in the knowledge that there will always be someone else begging for a job.

What can she do to protect herself and move to full-time employment without damaging her career?

  • You also might check out Freelancing SE – David K Jul 2 '15 at 14:07
  • It is not a bad thing. In this kind of job, freelancing all year long is common. The only thing is that she should look for other opportunities. After all, if she is a freelance, nothing makes stick with the company one week to the other. And if she manages to find other small contracts, she will be able to negociate the pay better. – dyesdyes Jul 3 '15 at 14:02
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If your girlfriend has her working hours defined (i.e. start time/end time not per week total) it'll be likely she'll fall into IR35 in the eyes of the taxman (i.e. a disguised employee which is what she seems to be).

Have a look at this:

IR35: find out if it applies

In this case the employer will need to take PAYE tax & national insurance etc from her and there will be no benefit for either from her being a contractor (apart from being easy to let go).

Working set hours is one of the big things the Taxman hooks onto, so this will be quickly noticed. I'd assume she is also supplied via an agency, or else this is another sure way to look like a disguised employee.

Look for the section "The Contract Review Service", she can anonymously give them details and they will tell her if she is going to be caught. If not they give her a reference number she can later quote if the year end thinks she may be caught up.

Usually the taxman takes a view you need to prove you are not an employee. I am a contractor (and a senior manager), and as such the following applies:

  • I have no authority to act on behalf of the client (in my contract)
  • I am contracted a certain number of hours a week (but not daily working hours)
  • I can work for other clients (i.e. not exclusively for one)
  • I can supply a suitable substitute
  • All mentions of me in org charts, email signatures etc have my job as well as "Interim"
  • I must have professional indemnity insurance cover, which I pay for, for work I do (and if the work went to external clients professional liability insurance)

I do though have:

  • A contract
  • A notice period (4 weeks either side)
  • my own company (who invoices the agency each month, not the employer, and is registered for VAT etc)

If this isn't the case for your girlfriend you may find the taxman just sees her as a disguised employee and everyone loses. If the employer is unaware of this then it's a sign they're either inept or dodgy.

And as an actual answer, if she is truly a contractor/freelancer, she should take on additional customers as she can to build up a portfolio and client base, then edge the current one out as she gets better opportunities.

  • Thanks, this is helpful - it looks like he is in complete breach of tax law. How do HMRC know what hours someone works? – AlexFoxGill Jul 2 '15 at 14:48
  • It'll be in the contract, there must be one, either physical (i.e. given and signed, maybe electronic), or implied (the company may have a standard one). If your girlfriend is on the same t&cs as a permanent staff member (which will likely define start/end times etc), she'll be seen as a disguised employee. It'll come out at the end of the tax year when she does her return. – The Wandering Dev Manager Jul 2 '15 at 14:53
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She can request a contract spelling out the terms of being a permanent freelancer. Even freelancers work on contracts. As a developer working with companies on long-term projects, I never work without a contract spelling out the expectations, duties, objectives, time, and compensation. Being a permanent freelancer so to speak is not a death sentence. Additionally, its not unreasonable to request pay be placed in an escrow account and that you are to be paid for work done up to that point. That will offer some protection against the company who may try to snowball work and compensation with infinite change orders and deadline adjustments. Simply do the due diligence to protect yourself and you work by adding some security and stability with a clear, concise contract. You have to look at it like a business/client relationship and less like an employee/employer relationship.

Ultimately if she can't get the company to work within some kind of context like that, then the best bet may simply be to either 1.) Accept it for the short term and find something else quickly, or 2.) Simply decline the opportunity if she can afford to. There are times it may simply be best to walk away from an opportunity that is obviously soon to be wrought with problems that will require damage control later.

  • Thanks. Do you write your own contracts or have the company do it? – AlexFoxGill Jul 2 '15 at 14:50
  • It depends on the nature of the work. I do both but always have my lawyer review the contracts. I usually revise my contracts on an annual basis if need be or where it may be a special situation. For general freelance work, I utilize a relatively standard contract but I have included language in it to cover compensation (40% upfront) and escrow of remaining funds before work is started. The contract laws may be different for the UK, but if you message me, I can send you a copy of it and you can see if it would be helpful in your situation. – Alex Jul 2 '15 at 14:58
  • Thanks, that's a kind offer but I think the situations will be too different – AlexFoxGill Jul 2 '15 at 15:00
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    When developing a freelance rate, make sure to increase the per hour charge to account for paying herself for time off and buying other benefits she might need. – HLGEM Jul 2 '15 at 15:36

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