Virtual Assistant or Employee?

By Admin SVA | 7 June, 2024 |

When you need support, it’s not always easy to know whether to employ or outsource. While that decision depends very much on you and your business, it’s also helpful to understand the pros, cons and costs of these two options.

Now, it can’t have escaped your notice that we are an organisation that supports virtual assistants and we obviously advocate the use of virtual assistants; however, we are also well aware that virtual assistants are not the right fit for every business, and so in this blog, we will look at this in the most unbiased way possible so you can get a fair and clear idea of what would work best for you.

A whistle-stop tour of the difference between a VA and an Employee:

What is a Virtual Assistant?
The quick definition of a virtual assistant is a freelance worker who operates from their own workspace, uses their own equipment and communicates virtually with their clients. Clients sign the virtual assistant’s contract, and the virtual assistant chooses their own hours and invoices the client only for the time worked. The virtual assistant is responsible for their own taxes, insurance, data protection registration (and other legislations they may require to be covered by) and cannot claim sick pay or holiday pay from clients. Virtual Assistants should have more than one client, and if they only have one client must be actively looking for more.

What is an employee?
An employee often works from the employers work space or sometimes from home, they use their employer’s equipment, software and office suppliers. The employer is responsible for organising tax, National Insurance contributions, business insurance as well as other perks and benefits. The employer is also responsible for paying their salary (which pays for a certain number of hours), holiday pay and sick pay. As an employer, you get to choose their hours, you can approve holiday and salary. Any training or professional development may also be funded by the employer.

The above points are important when it comes to ensuring that you are compliant with the off-payroll rules, IR35. Check the CEST Tool on the HMRC website if you are unsure on this (https://www.gov.uk/guidance/check-employment-status-for-tax)

Differences in Cost

Employee:

The National Living Wage in the UK at the time of writing this is £12 per hour outside of London).

Virtual Assistant:

The average UK Virtual Assistant charges £29.77 per hour (UK VA Survey July 2023).

Pros and Cons of both options to consider:

Employees

Pros of employees

Cons of employees

– Keeping everything in-house.
– Easy communication
– Good for team integration, social aspects and culture.
– Depth of commitment to your business.
– Keeping your data and confidential information in-house.
– Easier to track performance and accountability.
– More control over IP.
– Direct supervision.
– Predictable work schedule and availability.

– Have to pay for idle time as well as working time.
– They will need paying no matter what, even if
business is slow.
– Financial overheads – NI, payroll, holiday, sick pay,
employee insurance, health insurance, pensions contributions (benefits), etc.
– They require office space, furniture, hardware, software, office supplies and subscriptions.
– You have to provide hardware and software.
– Ensure compliance with regulations and legislation.
– Provide training, opportunities, professional development and career progression.
– HR challenges.

Virtual Assistants

Pros

Cons

– You only pay for the time you use, no paying for idle time, breaks or holidays.
– Flexibility: use them as much or as little as you need.
– No financial overheads.
– They work from their own office and use their own hardware, furniture, software and office supplies.
– They are responsible for their own training and professional development.
– You can have a trial period working with a VA without a long-term commitment, a chance to see if you are both a good fit.
– No HR responsibilities.
– VAs can be used to reach the point where you are ready to take on staff.
– Gives you access to a larger talent pool, particularly if your VA has a team or good contacts.
– Some VAs work outside of office hours (they may charge extra for this service).
– VAs are often more productive per hour because their work is typically project-based and time-bound.

– You have to ensure you and the VA are adhering to IR35 regulations (see here)

– Capacity issues – how busy is the VA, are they able to take on more if you need it?

– Communication challenges – if communication isn’t clear and flowing in both directions, then it can make or break the working relationship.

– If you have a team, good communication between them and the VA will be key.

– You have to share a VA with their other clients, so they may not be available on tap.

– You must do your due diligence to ensure that they are ICO registered, insured, data protection and GDPR compliant.

– Not all VAs work office hours, ensure you check before taking on a VA that they will be available when you need them.

You cannot tell virtual assistants when they can and can’t take time off, nor what hours to work (see IR35 above).

Calculating the Costs

To determine the financial impact of hiring a VA versus an taking on an in-house employee, you can use the following formula:

In-House Employee

Annual Salary:
Annual Salary = Hourly Pay × Weekly Working Hours × Weeks Worked Per Year

National Insurance:
National Insurance = 0.128 × Annual Salary

Total Annual Cost for In-House Employee:
Total Annual Cost = Annual Salary + National Insurance + Office Space & Equipment etc + Other Benefits