For a friend - Been forced Permie to Contractor

[Tomo1971]

A company that I used to work for currently uses permie staff and contract staff, the contract staff been through an 'agent/recruitment company'

An old colleague of mine, well in fact several of them have been issued their notice to end their permie employment in the next few weeks.

After leaving the meeting when they were made aware of their impending doom, they all had phone calls from the said agency offering them work for the same company as contractors.

To me, this seems pretty bad from a data protection point of view, although I guess the calls from the agency were to the permies work phones.

Also, after reading another thread (couldn't get the answer from that and didnt want to hijack it) there could be implications re IR35?

Thoughts?

[stek]

IR35 caught, they should ask for 300% rate increase to be on an even keel

[TheCyclingProgrammer]

IR35 caught, they should ask for 300% rate increase to be on an even keel

Probably IR35 caught, if soon to be ex-employees perform their contract through their own Ltd Co. which OP didn't say.

Not an issue if they use an umbrella or if the agency puts them on the payroll, which sounds like the more likely scenario here.

OP: IR35 only applies if working through an intermediary where you own more than 5% of the share capital. You should ask your friend what the deal is with the agency and what kind of contract it actually is.

[Tomo1971]

Probably IR35 caught, if soon to be ex-employees perform their contract through their own Ltd Co. which OP didn't say.

Not an issue if they use an umbrella or if the agency puts them on the payroll, which sounds like the more likely scenario here.

OP: IR35 only applies if working through an intermediary where you own more than 5% of the share capital. You should ask your friend what the deal is with the agency and what kind of contract it actually is.

I beleive that Friend (His Ltd Co) will have a contract with the agency and the agency in turn an agreement/contract with the company in question.

Friend invoices agency, agency invoice company and take off their 'cut' (for doing sod all).

[SueEllen]

A company that I used to work for currently uses permie staff and contract staff, the contract staff been through an 'agent/recruitment company'

An old colleague of mine, well in fact several of them have been issued their notice to end their permie employment in the next few weeks.

After leaving the meeting when they were made aware of their impending doom, they all had phone calls from the said agency offering them work for the same company as contractors.

To me, this seems pretty bad from a data protection point of view, although I guess the calls from the agency were to the permies work phones.

Yes they are IR35 caught. In addition if it's in the UK it breaches employment law.

If a couple of them are prepared to back each other up they should go and see an employment lawyer. They could get a nice payout from the company if they rattle them.

Also I wouldn't go back and work for a company that got rid of me as an permanent employee and broke the law as it's obvious how they like to treat people.

[malvolio]

Yes they are IR35 caught. In addition if it's in the UK it breaches employment law.

If a couple of them are prepared to back each other up they should go and see an employment lawyer. They could get a nice payout from the company if they rattle them.

Also I wouldn't go back and work for a company that got rid of me as an permanent employee and broke the law as it's obvious how they like to treat people.

This. Not only does it imply wrongful dismissal, this is the company looking to evade their tax liability for ErNICs and assorted other things such as pension provisions.

Personally I'd be shopping them to HRMC and DBERR and suing them, not working for them.

[eek]

Yes they are IR35 caught. In addition if it's in the UK it breaches employment law.

If a couple of them are prepared to back each other up they should go and see an employment lawyer. They could get a nice payout from the company if they rattle them.

Also I wouldn't go back and work for a company that got rid of me as an permanent employee and broke the law as it's obvious how they like to treat people.

+2. As Malvolio states something dodgy is going on here...

[Wanderer]

Yes they are IR35 caught. In addition if it's in the UK it breaches employment law.

SueEllen is right - they would be IR35 caught and there is also the question of the termination of the permie contract. I recommend legal advice from an employment lawyer on this.

They can come back as a contractor but they will need to trade as IR35 caught so they will pay a lot more tax than they did as a permie so make sure there is a substantial payrise in it.

We tend to suggest a rule of thumb that the hourly rate should be annual salary / 1000. So a £40,000 salary would mean £40/hour as a contractor. It sounds high on the face of it but since the contractor has to cover all the employment benefits that they no longer get, it's actually a reasonable rate. Any less than that and they are taking the piss.

[northernladuk]

Are they being forced to go contracting to get their jobs back or is their role gone but the agent can place them as knowledge of the client is useful? My last client had a habit of making people redundant only for them to appear again contracting 3 months later after a cool down period.

[northernladuk]

And why can't your friends pot for themselves? It's their risk after all.