Having Self-Employed Staff
In this article we’ll take a look at how you as business owner can bring on your staff as self-employed individuals instead of putting them on the payroll. Some of the advantages this has and how it might work better for your venue to modify your business model to this.
At Liveworks we understand how being in one of the most competitive industries in the world where 60% of new locations that open close within the first year of business and 80% stop operating just after 5 years. Modifying how you bring on your staff on board to this model might just help you avoid those pitfalls and always allow you to make a good financial plan for your venue when things get tough.
The latest study in 2017 that has been verified shows that the hospitality industry has an staggering 72.5% turnover rate making it one of the highest in any industry. So we ask why do you go through the burden of bringing new employees into your payroll if they aren’t going to last ? With an industry where most people are only looking for temporary work while they get through school or only do it on a part-time basis it would be more beneficial to both workers and venues of this model was adopted.
Let’s take a look at some of the pros of having your staff as self-employed individuals.
Pros of Self-Employed Staff
- Cutting out the processing of income taxes, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) for a self-employed staffer. Because an independent contractor or freelancer is considered self-employed, you simply pay the agreed-upon rate without taking out income taxes on behalf of the person.
- The worker is responsible for paying their own income taxes. That means much easier payroll processing when you go to pay your independent contractors. Self-employed individuals also pay CPP contributions themselves. Self-employed individuals have the option to participate in the EI program. If they decide to participate, they handle all of the costs and processing
- Eliminating those responsibilities saves you a significant amount of time on payroll processing. You cut out the time it would normally take you to calculate and remit all of those payments on each payroll cycle.
- By saving time on payroll, you save money overall. Shortening payroll processing frees up the person who normally handles the task to do other things, which makes their salary stretch further.
- You also save money in a few different ways beyond cutting your workload. You don’t have to pay the employer portion of the person’s CPP contributions like you do for employees.
- In addition minimum wage laws don’t apply to Self-Employed individuals, you can always come an agreement with the worker on setting an hourly wage. Liveworks allows this to happen by entering an hourly wage in the shifts you create. The Liveworks platform allows you to go 20% below the current minimum wage in your province.
What happens when minimum wage rises again?
It is not a matter of if, its a matter of when. As the federal government aims for inflation increase of 1-2% every single year it is almost certain that minimum wage rises along with it over periods of time. The process is repeats itself;f over and over again. Minimum wage rises and stays the same for a couple of years giving venues the ability to adjust until it rises again, and again, and again. However in this industry that instant rise in minimum wage does not allow for much adjusting room. Therefore the quickest adjusting tactics used by most venues is an instant increase in prices and you are forced to let a huge of your employees laid of in order to balance this out. Proven that this is not a good solution and it actually ends up hurting your business more and more.
Liveworks however has modified this business model to allow venues to better adjust to sudden increases in minimum wage where employees won’t be laid of and instead of instantly increases the prices in your products it will instead allow to plan it out and do it over time so that you can easily and smoothly make the transition to the rise of minimum wage and keep your establishment in a strong and healthy position.
The steps that the Liveworks platform allows you to take are that when minimum wage rises in your city Liveworks will allow you to set your hourly rates below 20% the current rise. This will allow you to have some room to adjust and plan your strategy much more efficiently.
The bottom line is that the future of work is changing. More and more people are opting in for gig and contract work. The rise in contract work has ben one of the biggest drivers in our economy and that will only increase in the years to come. Liveworks allows your workers the freedom to decide how they want to work and get paid. It also allows you the flexibility and balance that your venue needs when things get tough and a modification in your current operations may be just what your venue needs to stay ahead of this changing world.