If an individual is genuinely self-employed, they can provide their services as a consultant. Employment status is assessed by considering the relationship as a whole rather than by how the parties might otherwise label it in a contract or letter. Therefore it is important to carry out an assessment of the reality of the relationship including factors such as mutuality of obligation, the autonomy of the person in terms of hours, location of work and using their own equipment, and whether they can use a substitute to complete the work if they are not able to do so (this is not an exhaustive list and being clear on the status is often very tricky as there is no definitive answer).
Getting employment status wrong can have potentially serious consequences, for example, an individual can bring a claim for the sick pay, holiday pay and pension contributions that they should have received on the basis that they were actually an employee (and not self-employed) and/or for unfair dismissal in the event that they are engaged as a consultant for two or more years and then just “let go”.
There are also possible tax implications if a person has not received their pay through the payroll process when they ought to have done. In most cases if a person looks and sounds like an employee then it is better for the employer to treat them as if they are!