Pictured: Mike Russell

Shropshire construction companies are being urged to make sure their paperwork is in order, as the Government prepares to step up its clampdown on sub-contract workers.

The warning comes from Mike Russell, who manages the construction and property division at Shrewsbury-based accountancy firm Dyke Yaxley.

He said the coalition announced some months ago that it would be examining the "false employment status" of some staff.

"This could be very costly for any Shropshire contractors if they are subject to an inquiry into the employment status of the sub-contractors that they use," he said.

"If the Revenue can show that sub-contractors should instead be classified as employees, they could recover substantial amounts of lost tax and national insurance from the contractor, as well as imposing interest and penalties.

"Contractors should ensure that they have in place a signed self-employed contract for services, for each sub-contractor used on each contract, if they are self-employed.

"A contract for services is a legally binding document which sets out the rights and obligations of both parties.

"These include the fact  that the sub-contractor has no obligation to provide his services, has the right to send someone else to do the work on his behalf, and that the sub-contractor is not entitled to any employment rights.

"So, the sub-contractor is not entitled to any holiday or sickness pay and has no right to partake in the firm's grievance procedure, or to claim for unfair dismissal."

Mr Russell said: "The contract should reflect the true working practices of both parties, and provide a complete framework to protect both parties. This will then support the self-employed status of the sub-contractor."