Reply to: From Permanent to Contractor for the same company IR35

[Leeoz]

Thanks for the advice

Thanks to everyone for the advice, things have moved on a little. they have confirmed they aren't able to agree the contract route to finish the 2 projects due to pension and PAYE 'issues'. I am waiting on them coming back with a settlement agreement to extend my notice period, at least this way I avoid the risks of a fixed price contract and can twist their arm for an 'enhanced' redundancy package. However i will be prepared to effect an immediate exit, collect my redundancy and jump in to my new adventure!

[Old Greg]

This. Doesn't matter if it's a former employer if you agree a fixed price, it will be easy to argue you are outside IR35 on a fixed price job.

Your fixed price has to include the fact that they aren't paying National Insurance, holidays, sick pay, etc. It also has to cover you for risks:
possible overruns in case the size of the job is underestimated, exposure to someone else messing up and leaving you stuck, spec-confusion, payment delays, etc. In a fixed price scenario all the risks transfer from the client to you. You need to assess what those risks are worth and include them in the price.

The risk can be mitigated to am extent by including some text around pricing of change requests.

[WordIsBond]

Agree a fixed price for the work.

This. Doesn't matter if it's a former employer if you agree a fixed price, it will be easy to argue you are outside IR35 on a fixed price job.

Your fixed price has to include the fact that they aren't paying National Insurance, holidays, sick pay, etc. It also has to cover you for risks:
possible overruns in case the size of the job is underestimated, exposure to someone else messing up and leaving you stuck, spec-confusion, payment delays, etc. In a fixed price scenario all the risks transfer from the client to you. You need to assess what those risks are worth and include them in the price.

[GhostofTarbera]

3 month notice period - what penalty is written into your contract if you leave tomorrow ?




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[Old Greg]

Hi there, I am just about to enter the scary world of not being permanently employed as I'm in the process of being made redundant due to a commercial factor (client pulled a significant volume product).

Although I have been put at risk and have a 3 month notice period the 2 projects I am currently working are roughly 6 months from completion.

The company is going to ask me to complete the projects (with very specific agreed deliverables) I'm not too keen on effectively having 6 months notice and working it all, when other colleagues will be on equivalent notice periods but will be gone by the end of the month. However I am keen to finish the jobs (credibility etc as positives to support me going forward) but it needs to be financially advantageous to me.

What would the view of working my 3 months, then 3 months of specific contracted activities detailed with fixed milestones and end dates.

From what i've read it doesn't look practical so what might other options be?

Agree a fixed price for the work.

If that's not viable, Friday to Monday perm to contractor is not automatically inside IR35. Follow the usual guidance, get a statement of work, use a good contract template, get insurance and make the cultural shift to start acting as a business - stop going to permie meetings etc.

[Leeoz]

Redundancy Imminent

Hi there, I am just about to enter the scary world of not being permanently employed as I'm in the process of being made redundant due to a commercial factor (client pulled a significant volume product).

Although I have been put at risk and have a 3 month notice period the 2 projects I am currently working are roughly 6 months from completion.

The company is going to ask me to complete the projects (with very specific agreed deliverables) I'm not too keen on effectively having 6 months notice and working it all, when other colleagues will be on equivalent notice periods but will be gone by the end of the month. However I am keen to finish the jobs (credibility etc as positives to support me going forward) but it needs to be financially advantageous to me.

What would the view of working my 3 months, then 3 months of specific contracted activities detailed with fixed milestones and end dates.

From what i've read it doesn't look practical so what might other options be?

[WordIsBond]

Erm.. You already left the company as soon as you started contracting.

Yes, according to an Employment Tribunal.

No, according to HMRC.

[adubya]

...also if you resign you can be barred from income support for 26 weeks. Not a good position to be in if the contract falls through for whatever reason.

</psychocandy>

You can claim contributions based JSA.

[northernladuk]

Thank you again for your help. I have decided taking this contract Inside IR35 and look for another one outside IR35...
Once I get the new contract I will leave the company...

Erm.. You already left the company as soon as you started contracting.

[duckevlc]

Thank you again for your help. I have decided taking this contract Inside IR35 and look for another one outside IR35...
Once I get the new contract I will leave the company...

[GreenMirror]

Go and work at another company then come back. You can then get the contract written so it is definitely IR35 fine.

[b0redom]

...also if you resign you can be barred from income support for 26 weeks. Not a good position to be in if the contract falls through for whatever reason.

</psychocandy>

[HugeWhale]

Hadn't considered the redundancy implications.

If one is being made redundant, then I am guessing the resolution of that contract should be covered first. And thus a redundancy payment would be made. Is there a legal minimum to be made in respect of?

Nothing was mentioned in the first post to suggest contracting was in lieu of a redundancy payment...?

There's probably nothing in it. I've possibly set a hare running that I shouldn't have.
You've only been there two years so I wouldn't imagine the redundancy would be more than a couple of months' pay, tops.
The key point is that you won't get any redundancy - you will have to resign. If you'd been there for a decade or more it would be a concern, but after just two years...forget it.

[simes]

Hadn't considered the redundancy implications.

If one is being made redundant, then I am guessing the resolution of that contract should be covered first. And thus a redundancy payment would be made. Is there a legal minimum to be made in respect of?

Nothing was mentioned in the first post to suggest contracting was in lieu of a redundancy payment...?

[HugeWhale]

Be careful.

I think that IR35 investigations are about 1 in 1,000 (got that figure from this site somewhere), however HMRC will investigate if someone specifically is reported to them.
If you've ever ticked someone off at your current company, or there might just be a vindictive wolf in sheep's clothing, then they might report you and your chances of being investigated would be much higher.

Also, hate to ask this: Are you sure they don't want to just get rid of you and save on the redundancy? You resign, take a contract, they terminate after one hour and save serious £££££s on redundancy payments. Trebles all round for the Management!