IR35 and my redundancy payout

[RichardIII]

Hello

Apologies for the noob question, I am looking to go contracting for the first time.

I've been with my company as a perm for 11 years, they made me redundant last December but have extended my perm contract to December this year. They've now said they want me to come back as a contractor. I understand I'll be well in IR35, but wanted to know if my nice redundancy payment will be affected?

Thanks

[Wanderer]

I've been with my company as a perm for 11 years, they made me redundant last December but have extended my perm contract to December this year. They've now said they want me to come back as a contractor. I understand I'll be well in IR35, but wanted to know if my nice redundancy payment will be affected?

According to the Business Entity Tests for IR35, you are almost certainly caught.

Not 100% sure about your redundancy payment but I heard of someone who did just this. She took the payoff and came right back the very next day, same desk, same PC and worked for the outsourcing company. I don't know what her tax position was but it's certainly going to be a bit of a delicate situation or else employers would be taking the piss and doing it all the time in order to pay back handed bonuses to people....

I think the official line is that you can keep the redundancy payment but you will be IR35 caught and you will not get the (£30k?) tax free allowance for your redundancy payment. You need to get proper advice on this from a professional tax advisor because between your redundancy getting taxed and IR35 there is a lot of tax at stake here.

My gut feeling is that this situation is a bit like going back to your ex for some casual sex, it's very tempting but you know it's going to cause problems and probably end badly. The ideal thing for you to do is to leave on good terms, make a clean break of it and move on....

[SarahL2012]

Are they bringing you back to cover the same role? If so I would question whether they should really be making you redundant at all.

Might be worth asking a body like ACAS or if your company have given you some money to get a solicitor to look over your termination agreement then ask them.

[SueEllen]

If they are bringing you back to the same role or another role you can do it isn't a redundancy situation.

As already mentioned have a word with another body, and if possible get what the company is proposing either in an email, which you must print out, or a secret voice recording. (You will need to transcribe the voice recording if you take the issue further.)

[RichardIII]

Thanks for the replies. When I was made redundant last Dec I was asked to stay on and do a similar role in a different department. They've already extended my perm contract a couple of times as they're really happy with the work I've done so far.

From your advice it sounds like it would be a wrong move on my part and I should just contract somewhere else to keep outside of IR35. Paying tax on my 30k would not be fun!

Thanks again.

[SueEllen]

No risk for them and all the risk for me.

It's actually a false redundancy situation.

The only way they can get you to go is by signing a compromise agreement where you agree not to sue them for unfair dismissal (and possibly under a discrimination law).

If you did sue them and it went all the way to court then the papers are free to do a write up about the case.

So if they are not going to give you anything I suggest you go and talk to a solicitor asap as they can clearly keep you on as a permanent employee.

[tomtomagain]

Personally I think you should tell them to f'off.

They've made you redundant .... well at least put you through the uncertainty of a redundancy process .... then extended you to suit themselves.

And now they want you to forgo your remaining rights as an employee and become a "contractor" for them. A real contractor? Or just a handy little resource that they can pay below the market rate for and drop as soon as they are done?

You don't sound like you want to be a contractor and have obviously been loyal to them for over 11 years.

You owe them nothing ..... go and find yourself a company who will respect you.

[Taita]

If they are bringing you back to the same role or another role you can do it isn't a redundancy situation.

As already mentioned have a word with another body, and if possible get what the company is proposing either in an email, which you must print out, or a secret voice recording. (You will need to transcribe the voice recording if you take the issue further.)

Useful advice SE but I guess you are suggesting that the transcription (if used as evidence) is made to look as though it is notes taken by the employee during the conversation. Otherwise a recording made secretly could (but not necessarily would) be regarded as unfair and therefore inadmissable in any formal proceedings.

[DirtyDog]

Useful advice SE but I guess you are suggesting that the transcription (if used as evidence) is made to look as though it is notes taken by the employee during the conversation. Otherwise a recording made secretly could (but not necessarily would) be regarded as unfair and therefore inadmissable in any formal proceedings.

There's nothing to stop you recording the conversation, as long as you don't intend to disclose it to third parties - see OFTEL:

Can I record telephone conversations on my home phone?

Yes. The relevant law, RIPA, does not prohibit individuals from recording their own communications provided that the recording is for their own use. Recording or monitoring are only prohibited where some of the contents of the communication - which can be a phone conversation or an e-mail - are made available to a third party, ie someone who was neither the caller or sender nor the intended recipient of the original communication. For further information see the Home Office website where RIPA is posted.

Do I have to let people know that I intend to record their telephone conversations with me?

No, provided you are not intending to make the contents of the communication available to a third party. If you are you will need the consent of the person you are recording.

[edison]

Personally I think you should tell them to f'off.

They've made you redundant .... well at least put you through the uncertainty of a redundancy process .... then extended you to suit themselves.

And now they want you to forgo your remaining rights as an employee and become a "contractor" for them. A real contractor? Or just a handy little resource that they can pay below the market rate for and drop as soon as they are done?

You don't sound like you want to be a contractor and have obviously been loyal to them for over 11 years.

You owe them nothing ..... go and find yourself a company who will respect you.

That's exactly what I did a few years ago. Literally the next day after agreeing my leaving date my manager asked me to stay an extra month! I also felt a sense of moral victory when my solicitor told me I had an almost cast iron case for unfair dismissal although she advised me not to pursue it basically because my payoff was so generous.