Leaving a company to be a self contractor but continuing the same contract?

[Wanderer]

The only companies who I've heard of that have enforceable clauses seem to be in accountancy and law where they force employees to give 3 months notice and tend to immediately put them on gardening leave if they have another job.

To my mind that is the only way they can enforce a restriction clause. If a worker has an employment contract which restricts them from doing certain things then the only time the worker has to honour the contract is if there is some "consideration", ie payment otherwise there is no contract. Otherwise it's a straight forward restraint of trade and unenforceable.

[Tomo1971]

Im no expert her, so I apologise if I am wrong but just a thought.

OP is a employee of Co A and works on a project for Co B.

Surely if OP was to set up as a Ltd Co, then surely Co B have every right to get the best deal for the work carried out?

Would any clause in the OP's contract be between him as an individual working for Co B in the future.... surely he will be working for his own Ltd Co and NOT Co B?

If that makes sense...? Maybe not, lol

[Boo]

What type of legal issues do I have to look out for because I'm sure company A would see this as me stealing the contract while I was still employed?

What does your contract with Company A say ?

Boo

[Wanderer]

Would any clause in the OP's contract be between him as an individual working for Co B in the future.... surely he will be working for his own Ltd Co and NOT Co B?

If that makes sense...? Maybe not, lol

It almost makes sense.

What you will probably find is that companies generally don't go after the worker, they go after each other. So if company B poached a worker from company A (regardless of an intermediary like a LTD or umbrella being stuck in the middle) then if anything happened then it would most likely be company A taking action against company B rather than against the worker. That said, if I was the worker in that situation then I would also be inclined to ask company B to indemnify me from any action taken against me or my LTD by company A. Does that make sense?

The other problem here is IR35, a worker going from permie to contractor like this would need a bullet proof contract and genuine B2B working practices or they would be well and truly IR35 caught.

[jmo21]

If the OP gets made redundant, presumably that eliminates any issue like poaching, plus he might get a redundy payment, and a new contract to boot.

That's a lot of ifs and mights though.

[doodab]

To my mind that is the only way they can enforce a restriction clause. If a worker has an employment contract which restricts them from doing certain things then the only time the worker has to honour the contract is if there is some "consideration", ie payment otherwise there is no contract. Otherwise it's a straight forward restraint of trade and unenforceable.

Not true unfortunately. Restrictive covenants are enforceable as long as they are reasonably defined and protecting legitimate business interests.

It's quite possible that the relevant clauses in the contract are overly broad and hence cannot be upheld though.

Of course another issue could be the contract between the two companies, which may prohibit this. Even non-contractual pressure from the consultancy firm to persuade the client not to hire someone can be a factor. I know one guy who had his feet under the desk for 2 weeks before being terminated because the client basically didn't want to upset the firm supplying the other 10 guys on site.

[Red Arrow]

What does your contract with Company A say ?

Boo

I don't have one, it's a very odd situation and one I don't want to go into.

Thanks all for your responses. For now it looks like I'm safe with Company A in the short term. But I will be looking for work elsewhere now as it's obvious I have no job security.

I've decided against the whole being a self-contractor with Company B as it seems like it would be a legal nightmare for what is potentially only a couple months of worth of work. It would put Co B right off the idea I guess, which is a shame as I would make potentially earn 10 months salary in 3 months

[SueEllen]

I don't have one, it's a very odd situation and one I don't want to go into.

You do have one it's just not written down. If Company A are too stupid not to give you a written employment contract then you have a default one laid down in employment law. To see your rights just go to a website like ACAS.

Thanks all for your responses. For now it looks like I'm safe with Company A in the short term. But I will be looking for work elsewhere now as it's obvious I have no job security.

I've decidif ed against the whole being a self-contractor with Company B as it seems like it would be a legal nightmare for what is potentially only a couple months of worth of work. It would put Co B right off the idea I guess, which is a shame as I would make potentially earn 10 months salary in 3 months

It's not actually a legal nightmare.

You need to find out what what Company A's agreement is with Company B by asking a manager in Company B who is interested in employing your services. As there is no restrain clause due to you not having a properly defined employment contract then you can leave Company A and go work with Company B, if Company B are happy with it.

As you are an employee of Company A you shouldn't be caught my IR35 if you set the contract up properly if you are working for your own Limited. However if you search on this site you will see there are advantages and disadvantages of becoming a contractor.

[Red Arrow]

You do have one it's just not written down. If Company A are too stupid not to give you a written employment contract then you have a default one laid down in employment law. To see your rights just go to a website like ACAS.



It's not actually a legal nightmare.

You need to find out what what Company A's agreement is with Company B by asking a manager in Company B who is interested in employing your services. As there is no restrain clause due to you not having a properly defined employment contract then you can leave Company A and go work with Company B, if Company B are happy with it.

As you are an employee of Company A you shouldn't be caught my IR35 if you set the contract up properly if you are working for your own Limited. However if you search on this site you will see there are advantages and disadvantages of becoming a contractor.

OK I might have a word tomorrow then with Company B and see what the contract says and if they are open to the idea.

I don't intend to become a contractor full time. I just see it as a way to make a nice sum of money while looking for a full time job elsewhere. Just fed up with Company A earning a fortune out of me and paying me very little, on a contract they wouldn't have gotten without me. As in Company B went to them asking for me by name and not just a resource, to which of course the sales guys got a commission for and I got nothing

[Wanderer]

I would potentially earn 10 months salary in 3 months

Go for it then, don't mess about!