Reply to: Going from redundancy to contract

[mudskipper]

Even if your husband doesn't want to to take it to tribunal he will have to avoid working for his ex-employer for at least 6 months* and work for someone else in the meantime unless he wants to pay tax on his redundancy pay.

Where did you find that SE? I was in a similar position - although what I'm doing as a contractor is quite different to what I was doing when perm.

[SueEllen]

The job would be the same he is a 3D environment artist and would be employed on contract as a 3D environment artist.

The company have said they are streamlining the business as they can't afford to the pay the artists when they are in between projects. He has been told which agency they will be using and they will require contractors in about 4-6 weeks.

An employment tribunal judge and the taxman will have fun with that time limit as if an employer can see work picking up in that time frame then they shouldn't be making staff redundant.

I would have a talk with ACAS over this and then go and see an employment lawyer. Though it may be prudent to wait until the jobs are actually advertised so he has proof it wasn't a real redundancy.

Even if your husband doesn't want to to take it to tribunal he will have to avoid working for his ex-employer for at least 6 months* and work for someone else in the meantime unless he wants to pay tax on his redundancy pay.

BTW the time limit isn't stated in law but it's a case of not raising flags with HRMC. One of my mate is in a similar situation but his ex-employer won't touch him for a year.

[Fred Bloggs]

Mal is right. This is a classic case of the employer abusing their employees by the sounds of it. If the person happened to be in a trade union, they would fund a case like this all the way and they should too.

[malvolio]

Since this applies to a number of people ("the artists") then his employers are a bunch of bastards and he should consider taking them to an industrial tribunal as one of his options.

They are probably breaking the rules.

Link: Your rights if made redundant : Directgov - Employment

Exactly right. All the people in this need to be talking to an employment tribunal and mentioning things like "constructive dismissal" and "fraud". Not wanting to sound dramatic, but this is bloody serious. Get some professional advice.

[mudskipper]

Classic. Exactly why rules were bought in.

I do hope he realises that he needs to be paid more for the work as a freelance as opposed to what he was earning.

If he was earning £800 per week. Gets made redundant and they want to pay him £800 per week as a freelance. Poor show. Make sure he's getting freelance rates.

I'm sure he ain't stupid. But MF has a point - make sure he knows his worth. A rule of thumb is 1000x hourly salary = perm salary. So if he was on 45K, he should be looking at 45ph.

[MarillionFan]

Thanks everyone ...

The job would be the same he is a 3D environment artist and would be employed on contract as a 3D environment artist.

The company have said they are streamlining the business as they can't afford to the pay the artists when they are in between projects. He has been told which agency they will be using and they will require contractors in about 4-6 weeks.

Really don't want to have to pay tax on his redundancy pay he is already going to loose out on future bonuses (royalties) on his previous project. I had read a bit about IR35 I will try and read up a bit more. But surely if he is going to be caught by IR35 then his employers (a large company) shouldn't be telling him to apply for contract work.

Classic. Exactly why rules were bought in.

I do hope he realises that he needs to be paid more for the work as a freelance as opposed to what he was earning.

If he was earning £800 per week. Gets made redundant and they want to pay him £800 per week as a freelance. Poor show. Make sure he's getting freelance rates.

[RichardCranium]

Since this applies to a number of people ("the artists") then his employers are a bunch of bastards and he should consider taking them to an industrial tribunal as one of his options.

They are probably breaking the rules.

Link: Your rights if made redundant : Directgov - Employment

[tiana]

Thanks everyone ...

The job would be the same he is a 3D environment artist and would be employed on contract as a 3D environment artist.

The company have said they are streamlining the business as they can't afford to the pay the artists when they are in between projects. He has been told which agency they will be using and they will require contractors in about 4-6 weeks.

Really don't want to have to pay tax on his redundancy pay he is already going to loose out on future bonuses (royalties) on his previous project. I had read a bit about IR35 I will try and read up a bit more. But surely if he is going to be caught by IR35 then his employers (a large company) shouldn't be telling him to apply for contract work.

[northernladuk]

No disrespect to the OP but with it being his wife using the term 'same job' there could be a misunderstanding or miscommunication of his exact situation.

If my partner used the term 'same job' it could be any middle management role across all of IT for what she knows

[prozak]

My husband is being made redundant but he has told there will be contract work available within probably a month of him leaving doing the same job he is doing now. As this will be his first time contracting we have looked at using an Umbrella Company are they any legal complications with him getting a contract with his old employers.

thanks

exactly what IR35 was meant to stop.

extended by HMRC to everyone else who is an independent contractor.

[malvolio]

You make the post redundant and not the person, so if they offer a contract to your husband then there might be justifiable reason for him to make a claim against being made redundant.

It's more complicated than that.

Firstly if he's made redundant then brought back to do the same role, he's not redundant so will have to pay full tax on his redundancy payment since it no longer qualifies as one.

Secondly he is dead certain to be caught by IR35.

Thirdly the company is pulling a fast one by moving him from employee to supplier, neatly sidestepping their duties under employment law, as well as saving a small pile on pensions, training, sick pay and employers NICs

Fourthly, as has been mentioned, he would have a solid case for unfair dismissal.

So perhaps he needs to talk to someone with an employment law background...?

[FiveTimes]

My husband is being made redundant but he has told there will be contract work available within probably a month of him leaving doing the same job he is doing now. As this will be his first time contracting we have looked at using an Umbrella Company are they any legal complications with him getting a contract with his old employers.

thanks

You make the post redundant and not the person, so if they offer a contract to your husband then there might be justifiable reason for him to make a claim against being made redundant.

[pmeswani]

Just something that popped in to my head but I don't know the answer. His old contract will have a handcuff clause which often mentions working for customers or suppliers. Would an agency or umbrella or whatever be deemed as a supplier to your old company and therefor fall foul of the handcuff?

All said and done there are only legal implications if one party wants to go to court over it. Up unil then it is only handbags at 10 paces.

As the person is question is a former employee, it would have to depend on whether the former employee was put forward by an agent or went direct. Also depends on how long ago the person started at the company. I don't think the handcuff clause would apply, but don't know for certain.

[northernladuk]

Just something that popped in to my head but I don't know the answer. His old contract will have a handcuff clause which often mentions working for customers or suppliers. Would an agency or umbrella or whatever be deemed as a supplier to your old company and therefor fall foul of the handcuff?

All said and done there are only legal implications if one party wants to go to court over it. Up unil then it is only handbags at 10 paces.

[Clare@InTouch]

My husband is being made redundant but he has told there will be contract work available within probably a month of him leaving doing the same job he is doing now. As this will be his first time contracting we have looked at using an Umbrella Company are they any legal complications with him getting a contract with his old employers.

thanks

I don't see any legal issues other than the fact that he would have a hard time arguing he's outside of IR35. That being said, if he's going brolly then it doesn't matter!