This is one place where you can find out some answers to Mr Frog's questions.
http://www.businessli...er?topicId=1073859176
The 'legal' answer to this question is that if you take them on as employees, you require employers' liability insurance and you also need to register the employees with HMRC and deal with their tax and NI - not that there would actually probably be enough earnings to create a liability. This sounds like (and it is) a shed-load for work for the scale of what Mr Frog is doing.
You may wish to discuss the situation with your friends (as parents) and explain that you can offer the kids work on a casual basis and explain the risks - they would be working on a casual, self-employed basis. Probably write a letter confirming this. Much would depend on trust - are they willing that you will take adequate care of their offspring? Suggest that no power tools should be operated by them. For obvious reasons I cannot recommend this route but there are probably hundreds of similar situations out there of people doing the same.