Enforced rate cut ==> outside IR35. True?

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Peoplesoft bloke replied

8 April 2010, 21:27
Originally posted by SueEllen View Post

Employers are allowed to change terms on employees that includes saying that they need to take a pay cut, work 3 days a week for 3 days pay etc. If the employees refuse the employer can then sack them.

As usual, it's not quite that simple - even Lawyers disagree. I would have thought that if clientco cut contract rates but not permie pay, although not a sole determinant of IR35, it does indicate being treated in a non-permie way.
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SueEllen replied

8 April 2010, 16:45
Originally posted by Numpty View Post

A comment on El Reg:

I don't think that's true because I don't think "Employees cannot have enforced pay cuts" is true.

Employers are allowed to change terms on employees that includes saying that they need to take a pay cut, work 3 days a week for 3 days pay etc. If the employees refuse the employer can then sack them.
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badger7579 replied

8 April 2010, 13:54
Originally posted by Numpty View Post

A comment on El Reg:

I don't think that's true because I don't think "Employees cannot have enforced pay cuts" is true.

Anyway, if one is firmly inside IR35 and suspects an investigation is likely, is it worth begging ClientCo to impose an enforced 5% rate cut?
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Iron Condor replied

8 April 2010, 12:46
Originally posted by Numpty View Post

A comment on El Reg:

I don't think that's true because I don't think "Employees cannot have enforced pay cuts" is true.

Anyway, if one is firmly inside IR35 and suspects an investigation is likely, is it worth begging ClientCo to impose an enforced 5% rate cut?

it is not enforced if you beg for it.

i presume if clientco have to give evidence in court they wont want to lie.
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Numpty started a topic Enforced rate cut ==> outside IR35. True?

8 April 2010, 12:28
Enforced rate cut ==> outside IR35. True?

A comment on El Reg:

Remember that a negotiation to have a rate cut effectively means that you are no longer within IR35 because it fails the "act like an employee" clause. Employees cannot have enforced pay cuts. So, as a contractor, it is sometimes not a bad idea to accept a rate cut every now and then (whilst looking for a new role) because it gets you out of IR35 and could potentially save 1000's.

If you decide to not take up the offer of a cut; then you also fall outside IR35 because you negotiated but did not agree, a la Mutuality of Obligation.

I don't think that's true because I don't think "Employees cannot have enforced pay cuts" is true.

Anyway, if one is firmly inside IR35 and suspects an investigation is likely, is it worth begging ClientCo to impose an enforced 5% rate cut?
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