Severance package problem

[Peter W]

Hi, can anyone point me in the right direction with this one please.

I accepted a permanent job 3 years ago and ended up leaving this job with a severance package 9 months ago as the company was relocating. The strings attached to the severance package were that I couldn’t be employed at the company again within a 3 year period. I now have the possibility of returning to the company as a contractor, working via my own Ltd Company and I was just wondering if this could be in breach of the contract I signed to obtain the severance package ie I don’t want to have to pay this back, or the tax element as it was tax free.

Thanks for your help

[MrsGoof]

sounds like you may need an employment lawyer

[DaveB]

Since you are operating as a business in your own right - yes, you are, dont argue - then you can't be an employee of your previous employer.

The client is not employing you, they have let a contract with your company. You just happen to be the resource allocated to that client.

Provided there is no contract directly between you as a person and the client, and for the life of me I cant see why there should be, then there should be no problem.

Just out of interest, is this a direct contract or via an agency? If it's via an agency you have even less to worry about about as the client conteract is with the agency, not your company.

[Mordac]

The strings attached to the severance package were that I couldn’t be employed at the company again within a 3 year period.

"Strings" imposed by whom? If it was your former employer, and they are now considering offering you a contract, then it sounds like they are not so bothered about breaking their own terms.
If it's a direct contract (i.e. no agency) then you could probably get around this by having a proper B2B contract, where you are not mentioned by name, except as an authorised signatory/director of the supplier. This ought to get you outside IR35 as well, so it's worth doing anyway.

[threaded]

Being paranoid I would say the company is out to recover the severance package.

There is plenty of work about, so I'd say give it a miss until the time has run out.

[SameOldStory]

3 years seems excessive.
Most of these clauses have two purposes:
1) to avoid huge tax implications of the non-taxed severance package if they re-employ you within a certain time period (I think it is 6 months).
2) to prevent permies leaving to come back as contractors on more money (most of these say 6 months)

1) will be a tax issue and unchangeable
2) will be a company policy issue and doesn't really apply if the term in your severance package said "employ".

[Peter W]

Thanks very much everyone!