Self Employers Only

The first rule of any self employer joint venture must be that everyone who contributes to the joint venture, either directly or indirectly, must be self employed.

Otherwise, it’s not a real self employer joint venture, with peers who spontaneously lead and follow, but just a boring old everyday joint venture with masters and servants instead.

Remember what it’s all about

The goal of having a self employer joint venture is to create a more healthy and enjoyable working arrangement that allows for leading and following, rather than making people into masters and servants.

A servant is still a servant even if you delegate or indirect your control over them via an intermediary. If your working relationships are going to be peer relationships, then you must not have this kind of indirect master/servant relationship as part of your business.

But if you don’t care about creating a healthier working relationship and you just want to have employees, then you should just go hire employees. Why would you bother using a self employer joint venture structure to try and do that?

The idea that all contributors to a self employer joint venture must be self employed is fundamental to the nature of a self employer joint venture, and as such, should be explicitly stated in the contract that establishes the joint venture, to ensure that the joint venture maintains it’s self employment nature at all times.

None of your colleagues should be able to have an employee (whether theirs or someone else’s) make any part of their contribution for them. If they do, then they are breaking the agreement that they made with you. They are undermining the structure of the self employment business that you are working so hard to create.

If one of your colleagues refuses to abide by the joint venture agreement they made with you, then you should no longer be under any obligation to give them the benefits that come from contributing to the joint venture. You should no longer need to give them a share of profit, or a vote.

And you shouldn’t need any one else’s permission to stop providing those benefits to them. This means that the joint venture agreement should give you, personally, the right to make the joint venture cancel their profit share and voting rights, and if necessary you should also have the right to enforce this by suing that colleague in court, either on behalf of the joint venture or on your own behalf.

What is the boundary of “Contribution”?

This raises the question of what should be considered a contribution. If the joint venture pays the phone company for a mobile phone plan, and the phone company has employees (of course), then is the mobile phone plan a contribution made by an employee? Or what if you buy the mobile phone plan on behalf of the joint venture as part of your contribution?

A fundamentalist definition of contribution that would include this phone plan would make things very difficult very quickly. Businesses exist to trade with the broader economy, and much of the broader economy is made up of businesses that have employees. It might be possible for a self employer joint venture to succeed by only trading with self employers who themselves only trade with other self employers and so on - and if that’s the case then it might be worth doing. However the vast majority of potential self employer joint ventures could not succeed under these conditions.

If you are trying to avoid master/servant relationships, then the most natural boundary to use might be Control. The contract could state that no contribution should be made by an employee of the joint venture, or by an employee of yourself or your colleagues, or by an employee of any business that the joint venture or you or your colleagues control.

This seems to preserve the spirit of what a self employer joint venture is about, and who is really part of it and who is not. A phone company employee who sets up your phone plan? Not really part of the joint venture, and it’s not a “contribution”. An employee of a company that your colleague owns who does some work for a customer on behalf of the joint venture? Definitely part of the joint venture and definitely a prohibited contribution by an employee. And your colleague would be forfeiting all their profit share and voting rights by having their employee do this, and you should be entitled to enforce that forfeiture as an agent of the joint venture and in court, without needing the permission of any other colleagues to do so.

Subcontracting vs Sham Contracting

One type of control that should be considered by the agreement is sham contracting. This is where a business subcontracts some of it’s work in such a way that the subcontractor is really an employee, rather than an independent business. It’s ordinary employment dressed up as self employment. No contribution to a self employer joint venture should be made by anyone who is a sham contractor of the joint venture or of any other party controlled by the joint venture or it’s members.

One useful indicator (amongst others) as to whether a subcontractor is an independent business might be whether the goods or services they provide to or on behalf of the joint venture are also provided in equal or greater amount to others; for example if the joint venture hires an electrician as a subcontractor to install lighting equipment that the joint venture sells to it’s customers, then whether that electrician is a genuine subcontractor might depend on whether they are doing just as much electrical work for their own customers on a regular basis and are making as much or more money from their own customers as from the joint venture. That would probably indicate they were genuinely self employed, and the joint venture was just one of their customers. If on the other hand the electrician was subcontracted full time to perform installations for the joint venture and had no other customers, then that looks a lot like an employment relationship, and would be sham contracting.

If a self employer joint venture needs someone to devote the majority of their work to it’s business, then that person should probably become a member of the self employer joint venture. And if that person has a preference for being an employee instead, then they should probably find a different business to contribute to.

Next: Contribution is Key

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