Reply to: umbrella company altering contract to avoid notice payment

[TykeMerc]

I worked though a "big" umbrella for a while, binned them after they messed up basic admin and pay repeatedly.

Not sure how the OP will fare with the case, but it does have a destinctly dodgy ring to it.

[BA to the Stars]

They are a "big" umbrella company, who many will know and love.

Big - other words to describe big - large, huge, giant, hmmmmm

[DiscoStu]

Will you be naming and shaming once this matter is concluded?

[original PM]

As for brollies, if someone actually wants to be an employee, why not just be an employee of the Agent on their payroll, or an employee of the end client on their payroll. The concept of a brolly just feels like the addition of another superflous intermediary in the supply chain, which does add much value beyond being an outsourced payroll service.

Well the method the brolly uses for paying you means that you can offset some of your expenses (mileage subsistence etc) against tax thus meaning you do not get taxed on the full value of the invoice.

So you earn more money

Not overly difficult to see what value they add.

And as for the below

The whole idea of things being one way for one purpose, and deemed to be something else for other purpose is really confusing. Kind of reminds me of operator overloading where someone could decided to change the meaning of the Plus sign, so that 10+5 could quite happily become 2 under specific conditions and 15 under others.

What are you talking about fool!

[ASB]

Thanks

So, if I have understood correctly, if my business has a number of associates who do work when needed, and those associates use a brolly, there is no risk of them being deemed an employee of my business if my business pay invoices issued by the brolly.

The word "deemed" seems to come up far too often these days for things to be obvious and based on common sense.

I would hesitate to use the words "no risk". There is always some. But it is likely very low. You give no details of how the associates operate and how the brolly in question operate, but there has only been one case I am where a worker party has been found to be an actual employee of an end user in this sort of arrangement - and that had some very specific weird circumstances.

[original PM]

Yep all seems about right to me.

You will be paid on a min wage plus bonus based on invoice value.

What the brolly should try to do is sue the agency for the breach of contract and obtain full payment for the 3 weeks you have not been paid at the contracted hours - they should then pass this payment on to you.

Reality is they will not sue agency as it will remove the chance of the agency passing further referrals to them.

Likewise Agency should sue client for brach of contract but will not for the above reasons.

They tried to con you first time round with the initial cannot pay you and changing contract routine (not uncommon but shame on the brolly for being money grabbing b'stards).

Interstingly enough if you have any outstanding scheudle e expenses they will not be able to include these in your final payment as if they did it would reduce your taxable pay to below the NMW threshold.

unfortunately you are royally shafted - but go get another contract and then you will be earning from that one and also getting paid min wage for the 3 weeks you did not work --- every cloud has a silver lining etc!!!

As an unfortunate quirk of fate if you do get another contract they will then be able to take into account any outstanding scheudle e expenses so it is best to stay with that brolly!

[Integrity]

If they are deducting employers NI (or should be!) then they are your employer.

There certainly were companies which you would hand over a contract to and they may or may not employ you and they may or may not offer you a different class of share and they may or may not pay you dividends based on the income you generate. Essentially under the MSC legislation it is now broadly impossible to run a business this way.

This does raise a point though. If *yourco* signs up to a provider on this basis the provider can only remunerate your co - and basically it can only do this in a way that ensures the funds are subject to paye. In this circumstance it may still be the case that you individually are not an employee of the "brolly".

If *you* individually sign up you are an employee. The entity you are an employee of must provide you employment rights. You can't sign away the legal minima.



Yes. The brolly must provide the statutory rights to its employees.

It might be worth you reviewing this where Lisa did specifically confirm this.

http://forums.contractoruk.com/accou...rumbrella.html

Thanks

So, if I have understood correctly, if my business has a number of associates who do work when needed, and those associates use a brolly, there is no risk of them being deemed an employee of my business if my business pay invoices issued by the brolly.

The word "deemed" seems to come up far too often these days for things to be obvious and based on common sense.

[ASB]

They all walked away when I asked what happens to other staff on the payroll. They said that the services they offer are designed for one-person businesses.

If they are deducting employers NI (or should be!) then they are your employer.

There certainly were companies which you would hand over a contract to and they may or may not employ you and they may or may not offer you a different class of share and they may or may not pay you dividends based on the income you generate. Essentially under the MSC legislation it is now broadly impossible to run a business this way.

This does raise a point though. If *yourco* signs up to a provider on this basis the provider can only remunerate your co - and basically it can only do this in a way that ensures the funds are subject to paye. In this circumstance it may still be the case that you individually are not an employee of the "brolly".

If *you* individually sign up you are an employee. The entity you are an employee of must provide you employment rights. You can't sign away the legal minima.

Other questions that I ask in the same area - given someone who has a baby while working through a brolly, would the brolly be expected to pay maternity pay for 6 months, or sick pay, or other things generally that an Employer would be legally bound to provide for employees.

Yes. The brolly must provide the statutory rights to its employees.

It might be worth you reviewing this where Lisa did specifically confirm this.

http://forums.contractoruk.com/accou...rumbrella.html

[Integrity]

Yes. But that's a different problem. If you were paye you weren't any less an employee. Just a somewhat second class one.

It seems like the same problem to me!

[Integrity]

Except when your brolly goes bust,as mine did in the 90s. Then the Govt deem that you were not an employee under the regulations and are not entitled to any money.

As HMRC put it, employment status is not a choice, it is based on a set of tests. If we follow HMRC guidelines, a consultant can NEVER be an employee of a brolly, even if they are treated as such for Payroll purposes.

[Integrity]

It's quite simple. 2 applies. What one might think the relationship is and what the law says it is are different things. If somebody is on your payroll then they are your actual employee. It really is that simple.

It doesn't seem that simple. I do understand what you are saying.

Well, I've had several calls from brollies over the past few years. They called to offer me a service. The service they offered was to have them in the middle processing invoices and paying me money. Not one of them actually called me to offer me employment.

They all walked away when I asked what happens to other staff on the payroll. They said that the services they offer are designed for one-person businesses.

The other thing to consider is what happens when you apply IR56 tests to the relationship. Well, that falls over on the idea that brolly has no obligation to actually offer the consultant any work, in fact if they want work they must find it for themselves, then hand the client over to the brolly.

Other questions that I ask in the same area - given someone who has a baby while working through a brolly, would the brolly be expected to pay maternity pay for 6 months, or sick pay, or other things generally that an Employer would be legally bound to provide for employees.

[ASB]

Except when your brolly goes bust,as mine did in the 90s. Then the Govt deem that you were not an employee under the regulations and are not entitled to any money.

Yes. But that's a different problem. If you were paye you weren't any less an employee. Just a somewhat second class one.

[TheBigYinJames]

It's quite simple. 2 applies. What one might think the relationship is and what the law says it is are different things. If somebody is on your payroll then they are your actual employee. It really is that simple.

Except when your brolly goes bust,as mine did in the 90s. Then the Govt deem that you were not an employee under the regulations and are not entitled to any money.

[ASB]

It seems that it comes down to who is the employer and who is the employee in the relationship, and which of the following actually applies.

1) Consultant uses Brolly - The Brolly is only there for the purpose of processing payroll and getting cash from Client to Consultant.

2) Consultant uses Brolly - Consultant is actually an employee of Brolly.

Given what is known about Employment Status, I can't see how anyone can argue 2) above, and that in actual fact, the Brolly is a provider of a service to the consultant, and not the other way round. On this basis, how could the brolly pay the consultant money out of what has not been earnt. There may be a contract of employment, but the reality behind the paper is one of self-employment.

It's quite simple. 2 applies. What one might think the relationship is and what the law says it is are different things. If somebody is on your payroll then they are your actual employee. It really is that simple.

[Integrity]

It seems that it comes down to who is the employer and who is the employee in the relationship, and which of the following actually applies.

1) Consultant uses Brolly - The Brolly is only there for the purpose of processing payroll and getting cash from Client to Consultant.

2) Consultant uses Brolly - Consultant is actually an employee of Brolly.

Given what is known about Employment Status, I can't see how anyone can argue 2) above, and that in actual fact, the Brolly is a provider of a service to the consultant, and not the other way round. On this basis, how could the brolly pay the consultant money out of what has not been earnt. There may be a contract of employment, but the reality behind the paper is one of self-employment.