Pub Staff Question

Psyche

Hi there

I have a new client who is managing a pub. He is self-employed, and pays himself out of the pub takings. He also pays the pub staff a percentage of the takings, and is trusting them to each register as self-employed and handle their own tax and NI affairs. Can he do this, since they are not paid a salary or have any ongoing contract of employment, or does he have to register for PAYE etc.?

Thanks for any help!

Guest

On what grounds are they self-employed?

Bookworm55

They may not have a written contract of employment, but if they have a regular shift pattern set by the pub manager, then they are probably employees.

How are they self-employed?

Unless your client is engaged in some sort of partnership arrangement?

Psyche

I haven't met with the client yet, but he says he is not paid by the pub owners, he just takes the money over the bar (presumably he pays rent or a commission to the pub owners) and then he pays the bar staff a percentage of the takings. That did sound dodgy to me, as in, "are you sure you're allowed to do that?". So perhaps even the pub is not allowed to employ the guy in this fashion?

Thanks

A-Vic

i do payroll for pubs and personally would advise you take them on as staff with regular wages (staff happy as regular income client happy and preductable wages bill)and registar as employer saves a heck of a lot of work later on.

However it mean another bill that has to be paid no matter what the sales and maybe if sales are down warn the staff that you may have to cut the hours to reduced costs.

Sorry waffled a lot but i hope you understand

A-Vic

o and registar HMRC they are great on the employer helpline if still not sure give them a ring and ask advice

http://search2.hmrc.gov.uk/kbroker/hmrc/contactus/search.ladv?sr=0&as=1&cs=ISO-8859-1&sc=hmrc&sf=&sm=0&nh=50&ha=34&tx0=49652&fl0=__dsid:&tx1=2022&raction=view

Psyche

Thanks A-Vic. Can the manager remain self-employed (he's the one who contacted me) or should he ask the pub to pay him a salary instead of taking the money over the bar? What if they don't want to do it that way?

A-Vic

Psyche wrote: »

Thanks A-Vic. Can the manager remain self-employed (he's the one who contacted me) or should he ask the pub to pay him a salary instead of taking the money over the bar? What if they don't want to do it that way?

well depends you said hes not the owner? and its not limited ? can stay s/e employed but why would he? unless he has other income and expenses to deduct. its his choice

A-Vic

you can only advise its there decistion whether or not they take it. But if decide to stay self employed make sure you include any other charges on your quote incase you end up doing extra returns or wages

Poodle

Hi

You do not have to have a regular income amount to be an employee, paying a percentage of takings probably still means that the bar staff are employees, after all that's how commission only sales reps are paid.

I would suggest that you go through the employment status indicator on HMR&C website and see what response you get there regarding their possibly employment. I strongly suspect that it will come out that they are employees.

Also even if they earn under the limit each week to not have to operate payroll if they have other jobs then your client will have to stop BR from them and that would be done through PAYE. I have a couple of clients who have people working for them casually and they only earn small amounts, even though not registered for PAYE my clients are aware of the NI threasholds and hold signed P46's.

Non compliance could be very expensive for your client and then you would have an ethical dilemma and possible MLR issue.

Regarding your client, the responsibility with his employment status is well and truly with whoever pays him.

A-Vic

Also as poodle has picked up on the BR issue if they have more than one job there will be an issue over if they have more than one job and earning above lower rate.

Also minimum wage we have had a few minimum wage investigations over tempary staff and they have been forced to repay any amounts in full that havnt covered minimum rate. as below:-

http://www.direct.gov.uk/en/Employment/Employees/Pay/DG_10027201

deanshepherd

I wouldn't touch this job with a barge pole. Any pub 'manager' who pays his staff a percentage of profits sounds like he is winging it.

It takes good management to run a successful pub and even that doesn't guarantee success.

A-Vic

Yeah but dean wouldnt it be good if you could get it up to date and running better? a bit of a challenge

Poodle

I am posting this with absolutely no desire to start a long moral or ethical debate and Dean this is NOT intended as a personal attack it is just my opinion and I actually see nothing wrong with your viewpoint.

Sometimes people just need help and we may not always earn what we would actually like to at the start with these types of people since they tend to demand a lot of our time.

However, I, as A-Vic has suggested, like to help people and I am rewarded not necessarily financially when I finally get a set of books in that I am able to make sense of and more importantly so is the client.

Psyche

Dean, you're probably right to some extent that this guy is "winging it". However that's why he needs someone who knows more about these things to help him out. Surely everyone who is new in a job is to some extent "winging it"? I mean, I know I am! That's why when I am unclear on something I ask for advice from knowledgeable people, for instance on this forum Maybe he will succeed in running the pub, maybe he won't. But in the meantime he's doing his best and trying to learn, and I'll try to give him the best advice possible. So thanks for all the help.

burg

I personally would be doing a mixture of dean's advice and some of the others.

Basically I would take them on as I too do like to be able to help people. It depends on the person and your judgement to if you think they are just doing it out of innocence or to gain illegal advantages.

However, if they were then not prepared to make things more 'legal' i.e. paying staff through a payroll then I would then be looking to disengage. I think judgement of their intentions won't always be correct. If you find they are not prepared to make things 'legal' then you really have no choice but to cease your association with them.

Psyche

Burg, this is a good point and I have every intention of finding out exactly what he needs to do to comply with legal requirements. I feel he is now doing things the way he is because he doesn't know any different, but once he is apprised of the correct procedure if he carries on doing things the wrong way then yes it is time to cease acting for him.

deanshepherd

Just make sure you get paid what you are worth. Don't undersell the value to your client of keeping him away from a HMRC enquiry.