Opting out and lower tax?

[scorchio]

Hi,

I've been contracting for a few months now and have recently got a new 3 month contract. The thing is after reading the contract, it all states it is a contract for someone wanting to Opt Out from Employment regs.

Now in my limited experience, I've always Opted In as I thought Opting Out was basically a get out clause for the agencies to do whatever they want, to a certain extent. After speaking to the agency about this, they say that Opting out in my situation (Umbrella not Ltd) would help me pay lower amounts of tax on my earnings.

Now I've started the contract, having not yet signed it but is it right that once you've been 'introduced' to the client, eg, an interview, then the Opting out argument is worthless?

I've had a look around these forums and the consensus of opinion seems to be that Opting out has nothing to do with tax.

Am I wrong or is this agency talking a load of sh!t?

Thanks

[tim123]

For someone using an umbrella, he's talking tulipe.

And even if he wasn't, you can't opt out now anyway. You can only do so before being intorduced to the client. You can't change your opt in/out status at a renewell.

tim

[scorchio]

Thanks for the reply,

That's what I thought but I just wanted to check my situation before I stand my ground.

It's weird but the last couple of contracts I've had, the agencies have sent me a Opting Out form after I've had the interview and got the contract, is it just me or does that seem bloody pointless as it doesn't stand for squat?

[malvolio]

Because if you Opt In, you are entitled to a lot of extra protection, most notably around payment terms and handcuff clauses, that will cost the agency money.

The smarter among us might think that opting out ought to lead to a better rate by reducing the agency margin and risk, but in reality that ain't going to happen.

However, if you are Opting Out or In, wrtite your own letter or get a sample one from someone who knows what they're doing, do NOT use any pro-forma supplied by the agency, whic will most likely constrain your rights in some way.

Cynical? Me??

[tim123]

It's weird but the last couple of contracts I've had, the agencies have sent me a Opting Out form after I've had the interview and got the contract, is it just me or does that seem bloody pointless as it doesn't stand for squat?

TBH I really can't work out if the reason is:
a) They hope that they can bluff you into believing that it's valid.
b) They actually don't know that it would be invalid.

"They" refers to both the individual pimp and his company. Most pimps probably fit into category (b), but thier companies are another matter.

I've discarded the possibility that they think that they can win the day in court on the issue. Even if they did think this, an agent is never going to let this issue alone get as far as a court.

tim

[boredsenseless]

Can anyone post a succinct description of the rights that you gain by opting in and any benefits to be had by opting out.

I know this is a hottly disputed issue so I'd appreciate both viewpoints

[Sionner]

Opt in/out article

ContractorUK 09/06/04 - by Roger Sinclair Egos Ltd.

[malvolio]

In a nutshell, (not that I'm any sort of expert in this area!) Opt Out and you have all the old conditions that applied before the agency regs came in - handcuff clauses, no compulsion to pay on time, etc., etc. Opt in and you can be released from the contractual handcuff after a fairly short time (8 weeks?) and the agency has to pay you whether or not they've been paid by their client, the idea being to protect the more typical temp worker from some of the dodgier practices. It has no impact on your income (unless you can wangle a reduced margin by opting out becuase the agency carries less financial risk) nor on your IR35 status.

Arguably, though, if you opt in and are caught by IR35, why should you not have paid leave, pension provision, sick time and all the other employment benefits - after all, you are being treated as the agency's employee, which is another reason why they want you to opt out so they can deny all responsibility for your actions.

Basically its a mess. The original intent was good, but badly executed; the opt out option - negotitated by the PCG incidentally - was a good idea but not thought through and the end result is even more doubt and uncertainty than if they'd never bothered.

[The Lone Gunman]

I know this is a radical suggestion guys, btu have any of you thought of reading the regulations and making your own mind up?
Just google for "The Conduct of Employment Agencies and Employment Businesses" or search the DTI web site.

[Mailman]

If you opt in you are guaranteed to be paid (well as guaranteed as one can be when dealing with agencies).

The other main advantage is that you can go direct at the end of your contract. The only way the agencies can get around this is if they build in clauses to your contract that allows for them to be managed out of the relationship. If there are no clauses that manage agents out of the relationship then you can go direct at the end of your contract.

Remember, this advice is only worth the amount you paid for it

Mailman