Reply to: Own company when a permie

[TykeMerc]

Hence you make sure you have paperwork to prove that you had the idea before you started employment at the company.

That's a hard argument to win as the employer might argue that some of the idea development took part during time at work, it's not reasonable to assert that no time was spent even contemplating the venture or product.

It's a very tricky situation for many people and I'd say the only foolproof way to do this with 100% safety would be to have the business venture running before taking the job, but of course that's quite silly in many cases.

I suppose it's all down to how the employer is and how canny the businessman can play it.

[SueEllen]

Last company I was permie at, someone had an idea whilst working there. The company didn't take it up, so they left and presued it themselves. When they developed their idea and started making money their former employer went to court and took their business from them.

It was written into out contracts that any ideas we had, or anything we developed in out own time whilst employed by that company was owned by them.

Hence you make sure you have paperwork to prove that you had the idea before you started employment at the company.

[FarmerPalmer]

Maybe if you went to court, I don't know if it's considered an unfair clause. But every job I have taken has this in the contract... however decent companies are normally happy as long as you tell them about it.

Last company I was permie at, someone had an idea whilst working there. The company didn't take it up, so they left and presued it themselves. When they developed their idea and started making money their former employer went to court and took their business from them.

It was written into out contracts that any ideas we had, or anything we developed in out own time whilst employed by that company was owned by them.

[d000hg]

Hi,

I am in a permie job but have had my own limited before when I was contracting. I have developed some software in my spare time. One piece is now making a decent regular contribution so I am now looking at how I manage the payment. I was thinking of settup up a ltd again and then piling the money up in there. Presumably all I need to pay is the corporation tax on it and do the books each year?
Other option is to go through an umberella but I figured it would be better having own ltd for it.

Either have a Ltd, or do it as a sole trader... if we're not talking big money that might be easier as you won't have such a need for an accountant which is relatively quite expensive if you only bring in a few £100/month.

[d000hg]

If you developed the software in your spare time then this cannot be an issue with your permie employers to my mind.

Maybe if you went to court, I don't know if it's considered an unfair clause. But every job I have taken has this in the contract... however decent companies are normally happy as long as you tell them about it.

[SuperZ]

I think keeping schtum will be my initial avenue

I agree. I know what the others are saying but to avoid any issues just keep it quiet for now and see how your sideline develops. EMployers won't find out unless you tell them IMO.

Many people have second job, in the case of a second job the worse an employer can do is sack the person if it is against the permanent contract, they can't take ownership of any money that was made.

Companies don't own you, so I doubt they would be able to make a claim on something you developed in your own time, especially if it is not related to their business, and it's not as if you are trying to sell it to your employers either. I doubt there would be anything even remotely relating to this in your permy contract of employment.

Refering to something someone else said; being a manager and having a bright idea during lunch time is different from creating something in your evenings and selling it, especially if not directly related to employers business.

[NickFitz]

Had I developed a hairdresser's booking system while there, they would have owned it lock, stock and barrelwave.

Yes, but they do have hairdressers (at least on the TV side), so at least they'd use it

[RichardCranium]

If you developed the software in your spare time then this cannot be an issue with your permie employers to my mind.

When I worked for a UK based broadcasting corporation, their standard contract VERY clearly says they own all rights to all creative work you produce whilst working for them, regardless of how, when, why or where. That is the norm for contracts within the media industries.

The creative types have to negotiate exemptions for their private works.

Had I developed a hairdresser's booking system while there, they would have owned it lock, stock and barrelwave.

[SueEllen]

I know what you mean. I am pretty sure there is something in my contract about working for other companies.....I always assumed that that was more about work for direct competitors.
I can't see how they could stake a claim to ownership though?

Yes they can. Companies like IBM have such things in their contracts according to the people I know who are current and ex-IBMers. So anything you create in your free time belongs to them. That way they can get more Patents.

I was warned that courts don't reinterpret that law as the company can argue that the clause is there for your own H&E to avoid you working too many hours under the Working Time Regulations.

After all, any work is done in my (not so) free time and if anything they benefit from my skillset growing due to out of work research!!
I think keeping schtum will be my initial avenue

Just check your contract clauses.

If you make a million or more on it then if the company can afford it they will check out when you came up with the idea, and try and sue you for a settlement.

So just make sure you clearly state you invented the software before you started working for them.

[VectraMan]

I know what you mean. I am pretty sure there is something in my contract about working for other companies.....I always assumed that that was more about work for direct competitors.
I can't see how they could stake a claim to ownership though?
After all, any work is done in my (not so) free time and if anything they benefit from my skillset growing due to out of work research!!
I think keeping schtum will be my initial avenue

A full time job doesn't necessarily mean just whilst you're in the office; it means full time. If you're a manager, and you have a great idea about how to improve things at your employer, you can't sell it to them for extra cash just because you had it at lunchtime. It's assumed that having ideas is part of your job, and any ideas you have belong to your employer.

But IANAL, and this advice is worth what you paid for it. The most likely outcome is you risk losing your job if caught, but if you're making millions by then you won't care.

[theemeestroo]

I know what you mean. I am pretty sure there is something in my contract about working for other companies.....I always assumed that that was more about work for direct competitors.
I can't see how they could stake a claim to ownership though?
After all, any work is done in my (not so) free time and if anything they benefit from my skillset growing due to out of work research!!
I think keeping schtum will be my initial avenue

[Sally BFCA]

If you developed the software in your spare time then this cannot be an issue with your permie employers to my mind.

Maybe consider applying for a patent to protect it?

It would also have to be treated as a capital asset in your accounts, and hopefully, amortised with appreciation. You may need to take the advice of your accountant on this.

Well done BTW, it's good to hear!

...is Dragon's Den calling?

[VectraMan]

I want to give VectraMan a million pounds.

It's a risk either way, but I would say that if you ask your employer beforehand, the most likely outcome is that they'll say no, and then where does that leave you?

The best approach to working full time for one company, whilst carrying on an additional business on the side, is to be a contractor.

[deckster]

Only problem with this sort of thing is that your employer might not be too happy about it, and at worse, could claim some kind of ownership as you were working for them. Best to have an open and frank discussion with your employer's legal department to come to an arrangement that everybody is happy with, rather than risk instant dismissal when you get found out.

I couldn't agree more.

[VectraMan]

I can't see how an umbrella would be an option for something like that, as they're going to expect to sign a contract, not receive payments for sales.

Just set up a Ltd., and pay dividends from it as and when you feel like, and declare it all on your self assessment return. It's not too hard to manage the end of year stuff by yourself for a simple company, but if you can't, find an an accountant to do it.

Only problem with this sort of thing is that your employer might not be too happy about it, and at worse, could claim some kind of ownership as you were working for them. Best not to tell them.