Reply to: Avoiding employment rights

[bangface]

What I don't quite understand is -- if you are a contractor working under an umbrella (or even a ltd Co), surely you are "employed" by the umbrella company and sent to the client as one of their "consultants".

Yes I know everyone understands the reality of the situation, but as far as the legal standpoint, isn't that the case?

Also I find that any contractors actually trying to obtain employment rights in this manner are ruining it for everyone else!

Yes, that is correct TazMaN and its because of that status that the individual's can claim expenses from the brolly that employs them.

[DaveB]

What I don't quite understand is -- if you are a contractor working under an umbrella (or even a ltd Co), surely you are "employed" by the umbrella company and sent to the client as one of their "consultants".

Yes I know everyone understands the reality of the situation, but as far as the legal standpoint, isn't that the case?

Also I find that any contractors actually trying to obtain employment rights in this manner are ruining it for everyone else!

Not sure about the umbrella scenario, but when running a Ltd you are a director of the co. and as such there are differant rules in place governing employment status etc. For example, Directors are njot covered by minimum wage. In fact you dont have to pay yourself a wage at all, it just works out more tax effecient if you do.

[ChimpMaster]

What I don't quite understand is -- if you are a contractor working under an umbrella (or even a ltd Co), surely you are "employed" by the umbrella company and sent to the client as one of their "consultants".

Yes I know everyone understands the reality of the situation, but as far as the legal standpoint, isn't that the case?

Also I find that any contractors actually trying to obtain employment rights in this manner are ruining it for everyone else!

[LazyFan]

In the Muscat case the judge stated that anyone who is "implied" to be like an employee could and would indeed be classed as an employee, disguised or otherwise.

Which is the old beaks way of saying that anyone who has to do what employees do, or has been treated like employees (same manner) is really an employee of the end client company, regardless of how many companies are in between.

So, if HR terminates your contract with the thinking that you have been around too long and may get employment rights. This means they are thinking that you have been treated and worked in a manner the same as one of their employees. This would of course just be an implication. But would also mean the "implies" judgement applies again. Which would make you a disguised employee.

Of course judges can never be relied upon for consistent judgements (much like football refs), but if there is anything that "implies" you are being treated, worked or acted like an employee, then according to the Muscat judge you are one.

This would mean that when HR departments try and attempt the following:
1) Terminate the contract due to the contractor being around too long.
2) Make you sign forms that are addressed to you as a person rather than your company (like DDA, Credit and Identity checks).
3) Invite you as a person and not as a business to the Xmas party.
4) Do not invite you to their business partner Xmas party.
5) Put you on email groups with everyone else.
6) Do not put your company on the for tender business email groups.
7) Ask you to do something rather than asking your company to do it.

With point 2) you still have to do this, but its better to do it through your company, than a form which says "for contractors too".

Now lots of contractors have done 2) and could be therefore "implied" to be employees whether they want to or not. Another balls up by HR people who know nothing. And that includes all their legal departments as well.

My advice is to tell the client that your company would be glad to sign everything as a request to your company. However you cannot sign such things personally as:

1) It's against the terms of your contract. If you check you will find it is, stupid agencies have now tied your company down to them, but not you. They only tie you down on stealing the client from them. Not for you personally to do anything else, as then you would be an employee.
2) As you may get employee rights as your being treated like an employee. No need to mention the Muscat case. Just telling them "are you saying I should do what employees do, as that means I might be an employee and no one here wants that. But I am happy to sign all forms if you do it as a B2B request".
3) Agency still not playing ball? Tell them this. "But what happens if an upset contractor, not me of course mate as I would never do that, but an upset one, goes and tells the Inland Revenue? Then we are all stuffed!" At this point the agency will hide your non-compliance. As we know agencies hide things and take the money, rather than do a proper job and educate the client properly.


So, now we have a work around for this nonsense. But there is a bigger problem. And that is HR now sees contractors as temps. So, they are treating us like that. We need to start some propaganda and say we are SBE's.
Small Business Enterprises.

That’s the only way this nonsense will stop. Of course that means we can start to get on those tender lists and also supply more people than ourselves and start consultancies. Which is another reason why HR wanna stop us, as they would loose power over us and become a redundant office.

[DimPrawn]

LG sounds about right to me.

I can sum up the whole IR35, employment and agency regs status more succinctly.

The only things certain about any contractors status is that the IR will certainly want to tax you as if you were employee of the client, the client will certainly not want to give you any employment rights and voting Labour will certainly only make things worse.

HTH

[The Lone Gunman]

I don't believe this is something you can opt out of, though I don't know why and I'd be happy for someone to correct me on that.

For you and Chunky: First off IANAL and by no means an expert.

The "opt out" issue is for the cover provided by the conduct of agents act. It has nothing to do with employment law. Opting out may be a small relevant pointer to your employment status.

We have 3 issues. Employment status, IR35 status and opted status.

Being opted in gives you certain protections against non payment and restrictive clauses in your contract should you want to work for the same client again. It gives no major pointer to being inside IR35 though does show some lack of being in business in your own right (arguable and not the time or place).

Your employment status and IR35 status are measured by the terms and conditions of your contract and some of the realities of your situation.
If you are deemed employed then that status starts from day one even though under law some of the rights and beneifits are not available on day one.

Being deemed to be an employee for IR35 status does not necessarily mean you will be deemed employed for employment status.

This just goes to prove how difficult it has become to be a contract or freelance worker.

Does that help? Any other experts confirm?

[pickle]

too long

Get another contract and move on. Five years is long enough for anyone surley? You say you would "rather be a contractor than perm", so get on with being a contractor. Or did you really mean "I would rather be paid like a contractor but have the working life of a perm" ?

[Zasky]

I don't believe this is something you can opt out of, though I don't know why and I'd be happy for someone to correct me on that.

[chunkymonkey]

isnt this covered in the Opt out/opt in clause? I thought you lost your protection rights if you opted out etc or am I missing something more fundamental?

[interested]

Sorry, but you're both wrong. The principle in Muscat - that a worker was taken on under conditions equivalent to a permie and so he should be treated as a permie, including employment protection rights - applied from day 1 since the contractual conditions had not changed from day 1: what was contractually true on day 367 was no different. "One year and you're an employee" is a myth.

Equally five years or not does not make you an employee. There was a recent IR35 win when the guy had been on site for seven years. One of the coutner arguments is that is shows good commercial management to hang on to a client engagement for that long.

It's the contract makes you a permie or a freelance, and the conditions under which you work. If you are suddenly a employee, what about back holiday and sick pay and pension contributions, what are you going to do about all the VAT you 've charged, what about all the employer's NIs you've paid which you should now reclai from your "employer", what about lost interest on tax improperly paid that you want back... Just where do you start?

Sorry, I meant that the most common employment 'right' ie to claim for unfair dismissal, only applies after an individual has worked for 12 months irrespective of the number of hours per week worked (a fairly recent development)

[malvolio]

Sorry, but you're both wrong. The principle in Muscat - that a worker was taken on under conditions equivalent to a permie and so he should be treated as a permie, including employment protection rights - applied from day 1 since the contractual conditions had not changed from day 1: what was contractually true on day 367 was no different. "One year and you're an employee" is a myth.

Equally five years or not does not make you an employee. There was a recent IR35 win when the guy had been on site for seven years. One of the coutner arguments is that is shows good commercial management to hang on to a client engagement for that long.

It's the contract makes you a permie or a freelance, and the conditions under which you work. If you are suddenly a employee, what about back holiday and sick pay and pension contributions, what are you going to do about all the VAT you 've charged, what about all the employer's NIs you've paid which you should now reclai from your "employer", what about lost interest on tax improperly paid that you want back... Just where do you start?

[DimPrawn]

Why don't you spend 30 minutes jotting it all down and contact your MP?

http://www.writetothem.com/

At least you will feel like you've got it off your chest and hopefully caused a small amount of paperwork for them ***** in Westminster.

[Zasky]

I'm sure I am a disguised employee and, if I wanted to, would probably have a good case for claiming so. As I would rather be a contractor than a permie, and my client wants that too, you would think that it would be possible to make this happen. There don't have to be any losers here. As it is, my client will have to replace me with another contractor and lose 5 yrs experience in the company. Now that's daft.

[interested]

This is a mare's nest, all the more complicated by the Muscat case. In reality, if you have employment rights now, after five years, you had them after day one, so your client's Human Remains are being stupid. There is no safe period, the only guranteed route is through a proper B2B contract - and even then, HR will try and screw it up.

Talk to your (ex-)line manager and get a direct contract against a purchase order for a given deliverable, and you can both tell HR to go play in the sandpit where they belong. Until someone takes this to court (I think PCG are looking for a test case if you want a battle to fight!) it is never going to be sorted, the decision in Muscat and the underlying case law is just too tangled.

I'm not sure it is the case that you acquire employment rights on day 1 - they are broadly in line with those of a permanent employee which are acquired mainly after 12 months.

However - if you're doing a contract for 5 years I can't see how you are anything else other than a disguised employee?

[malvolio]

This is a mare's nest, all the more complicated by the Muscat case. In reality, if you have employment rights now, after five years, you had them after day one, so your client's Human Remains are being stupid. There is no safe period, the only guranteed route is through a proper B2B contract - and even then, HR will try and screw it up.

Talk to your (ex-)line manager and get a direct contract against a purchase order for a given deliverable, and you can both tell HR to go play in the sandpit where they belong. Until someone takes this to court (I think PCG are looking for a test case if you want a battle to fight!) it is never going to be sorted, the decision in Muscat and the underlying case law is just too tangled.