Originally posted by: garygarygary

Hi there,

I'm wondering about employing people who work at home to do the Post and Packing for an online shop.

Basic idea:
I buy products from the wholesaler.
I distribute products to one or several "P&P" people working from home.
The products are sold online.
As orders are received, the "P&Pers" get a daily list, and they do the packaging, labelling etc, and get the stuff to the Post Office.
Once it's done, they notify me (or the system via a web interface) that the orders are shipped.

(It sounds very much like "piece work", but rather than me dropping off a bunch of components, and collecting a bunch of finished items, I'd be dropping off products which would then be shipped out. Piece work used to be quite common, but I haven't heard much about it recently. I seem to remember it was/is considered something quite close to slave labour!)

I'd probably be looking to employ retired (especially early-retired) people who want to work a few hours, make a bit of money, and "keep their hand in".

Does anyone know the legal implications for this? I'm thinking TAX/NI rules, Working from Home regulations, insurance (eg if they are holding business stock at home) - that sort of thing.

Anyone doing this?

Thanks in advance for any thoughts.

Gary.

Hi Gary,

It's an interesting idea, but I believe the costs would be prohibitively high. In addition to supplying your home packers with boxes, you'll need to supply them with void fill, labels, a means of printing those labels, and a means of printing packing slips.

Additionally, you'd need to insure your stock (their home insurance categorically won't cover it), which will be very expensive because it's spread out over many sites.

Is this for your own business, or are you thinking of setting this up as a business in its own right (putting packers in touch with people who need packing)?
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www.symworks.com

0845 009 8230

UK web solutions

Gary,

I would disagree wholeheartedly with the previous poster!

Such outsourcing activities are really quite common. The equipment cost of a laser printer is about £100 and may well already be owned by the employee. All packaging material etc can be delivered direct by whoever you buy it off, as can the stock. Moreover insurance for the stock may well be covered by house insurance if properly declared. Depends on the policy and also your attitude to risk depending on the cost of the stock.

Regarding your actual question these would most probably be employees of yours and therefore would be on your PAYE so NI, tax etc would arise. If the sums are very small (less than £100 a week) there are some simplified ways you can account for PAYE an NI may not arise. Similarly it may be that you can account for this as self employed earnings but it is going to be rather tenuous and still put the risk on yourself if HMRC decide these are employees. Status reviews are quite complex and require proper advice rather than forum comments.

hope this helps.

Regards,

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James Smith
Chartered Accountant
www.jamesesmith.co.uk

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

You would need to take specific and specialised legal advice from an employment lawyer. We have assisted a number of clients with home working situations and also sadly represented clients when they have set up without advice and been investigated by the Inland Revenue. Happy to help if you email us direct.
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LawHound Limited www.lawhound.co.uk
01244 300413

wrt to "what the situation would be in this sort of case with regard to holiday pay, sick pay (maternity pay!) etc. How do piece-work employers get round it, if they still exist?"

They comply with the regulations, they don't "get around it".

Its really not all that hard to do, your payroll provider will normally be able to give routine advice on this once you have the hard bit sorted out in terms of the employment status of these persons for which you will either need some employment law help as above or your accountant may be willing to advise depending on their background.

Regards,

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James Smith
Chartered Accountant
www.jamesesmith.co.uk

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

Unless they were self employed and you contracted the work out. then they would have to sort out tax etc themselves. Each worker could act as an agent. I've worked for companies that have done this before. I think it's a bit like some catalogue companies, like avon or Usbourne books. I don't know the implications to this so you'd have to look into it. 

I had a couple of thoughts about this, in no particular order:

1) Most people have problems getting their site to be selling enough to sustain them.  This is an interesting approach, because it suggests you are expecting high numbers of sales.

2) How do you maintain quality control, with regards to how the items are packaged and sent out?  Human nature means that one or two of these packers may be sloppy and not present the overall corporate image you wanted originally.

3) Why, if your business was selling enough to sustain all these out-workers, would you not just employ someone who works at your own premises and you can keep control over.  This also has advantages as your business develops as you only have one person to retrain.

4) How do you work out how much stock everyone needs.  Do you give one category of products to one person, and another to a different person, etc?  Otherwise you will end up with pieces of stock all over the place and stock control will be difficult.

It can work - but it needs to be very well organised to begin with.  It also needs the sales to sustain it, or people will get bored with it quickly and you will be collecting stock again all over the place.

Good luck

Mark

www.ComspecComputers.co.uk">href="http://www.ComspecComputers.co.uk">www.ComspecComputers.co.uk  -  Home/Business Computer Services

Looks like a hot topic!

But why not hire freelancers - if they are self-employed (someone above suggested it), then you are not the one responsible in paying tax and NI, but make sure you have enough work for them as they will not stick around if you don't. Its not that easy to find reliable people nowadays....
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Anna Shaw BA (Hons)
Director
Anna Shaw Associates
0845 003 4267
info@annashawassociates.co.uk