Reply to: Convincing an MD to take me on as contract rather than perm

[NorthWestPerm2Contr]

If a misguided view on the 24 month rule is worrying him wait till he hears the rest. You said



But it does and you will have to act differently. You will naturally be excluded to some extent, all contractors are by permies. Try telling him about other points that you insist on specifically...

RoS - You have the right to send someone else in to do your work if you don't want to.
Schedules of work - He has to produce a new one for every piece and cannot break you off to do other undocumented work
D&C - You will tell him when you are not available and won't be booking holiday
D&C - You cannot follow procedures for expenses and so on the permies do
D&C - He can't direct you in your work
MoO - You don't have to accept further work if he offers it.
History - Don't even get in to discussions about your form.

Bloke is going to have a bloody thrombie.

You could of course smooth it all over with promises that it won't happen and he doesn't have to worry or don't even tell him but they the whole set up is a sham which will easily be uncovered, particularly when the MD get's tired of playing 'the game'. Telling him the bits he wants to hear and ignoring the bits he doesn't isn't the way to go.

Just look at the definition of a disguised employee..



Sound familiar?

Well this has been a useful thread. Will definitely point out the differences to the client. If they are happy to setup as such then I will join, if not I won't. Simple as really....

[psychocandy]

What 24 month rule are you referring..??? I think you are getting confused.

anyhooo advice from the PCG here you can tell the MD to have a look

https://www.pcg.org.uk/resources-cli...-your-business

Yeh why would client care about the 24 month rule?

[psychocandy]

Yep, had something very similar.

Was taken on by a company that did linux stuff. I explained I did not know linux and they said it did not matter. A new CTO was brought on board just after I joined.
On the last day of my probation he told he was worried that I would struggle as I did not know linux. He agreed that my work was fine but he was worried it would cause a problem in the future. I could either sign a form agreeing that my probation was being extended by a month (the form also contained references to meetings which had not happened etc and issues about my performance which agreed was not actually an issue) or he could fire me on the spot. I had a mortage, a child and a pregnant wife so I swallowed my pride and signed the form.

A week later I approached him and suggested a 1 month rolling contract. That way if there was even any issues about my performance we could part ways immediately but, being as I was actually getting everything done that needed to get done they might as well keep me until then.

He refused and threatened to fire me if I ever mention it again. He then explained that there was no way I would pass the probation and the months extension was just him being nice. I resigned and he refused to sign the form and insisted on us using one he wrote which explicitly said my employment terminated that day.

I dealt with it by leaving and deciding no one was going to bully me like that again. I now run my own business and work on my terms.

Nice guy...

[Bunk]

If a misguided view on the 24 month rule is worrying him wait till he hears the rest. You said



But it does and you will have to act differently. You will naturally be excluded to some extent, all contractors are by permies. Try telling him about other points that you insist on specifically...

RoS - You have the right to send someone else in to do your work if you don't want to.
Schedules of work - He has to produce a new one for every piece and cannot break you off to do other undocumented work
D&C - You will tell him when you are not available and won't be booking holiday
D&C - You cannot follow procedures for expenses and so on the permies do
D&C - He can't direct you in your work
MoO - You don't have to accept further work if he offers it.
History - Don't even get in to discussions about your form.

Bloke is going to have a bloody thrombie.

You could of course smooth it all over with promises that it won't happen and he doesn't have to worry or don't even tell him but they the whole set up is a sham which will easily be uncovered, particularly when the MD get's tired of playing 'the game'. Telling him the bits he wants to hear and ignoring the bits he doesn't isn't the way to go.

Just look at the definition of a disguised employee..



Sound familiar?

Sounds to me like the MD has more idea about contracting than the OP. He doesn't want a contractor, he wants another permanent member of the team. No contract in the world is going to protect you if the working practices ever get investigated.

[northernladuk]

Does the MD want someone to work on a particular project and then expect them to part ways at the end of the project? Or does the MD want someone who will do whatever is asked of them whenever some work needs doing, whatever that may be?

Although i've not been in that situation, i'd make it clear that as a contractor I help out on a specific project(s).

I think that one is pretty obvious. Headcount? Contractor?

[northernladuk]

That's not how the working practices will work. The Client will need to be aware of the differences..... Especially those ones that HMRC will come after him with.

Point taken though - these will need to be clarified with them before agreeing to any assignment.

If a misguided view on the 24 month rule is worrying him wait till he hears the rest. You said

- HMRC and 24 month rule, also the idea of not being committed in the long-term
- Me feeling excluded because everybody else was perm
- Me acting different because of my different setup

I have tried explaining that being set-up as a business doesn't necessarily mean any of the above.

But it does and you will have to act differently. You will naturally be excluded to some extent, all contractors are by permies. Try telling him about other points that you insist on specifically...

RoS - You have the right to send someone else in to do your work if you don't want to.
Schedules of work - He has to produce a new one for every piece and cannot break you off to do other undocumented work
D&C - You will tell him when you are not available and won't be booking holiday
D&C - You cannot follow procedures for expenses and so on the permies do
D&C - He can't direct you in your work
MoO - You don't have to accept further work if he offers it.
History - Don't even get in to discussions about your form.

Bloke is going to have a bloody thrombie.

You could of course smooth it all over with promises that it won't happen and he doesn't have to worry or don't even tell him but they the whole set up is a sham which will easily be uncovered, particularly when the MD get's tired of playing 'the game'. Telling him the bits he wants to hear and ignoring the bits he doesn't isn't the way to go.

Just look at the definition of a disguised employee..

Contractors using a limited company to trade would be ‘disguised employees’ if they pass the tests of employment and if, were it not for their limited company intermediary, they would otherwise be employed by their client.

Sound familiar?

[kingcook]

I have had a few conversations with an MD who is looking to increase his headcount <snip>

Does the MD want someone to work on a particular project and then expect them to part ways at the end of the project? Or does the MD want someone who will do whatever is asked of them whenever some work needs doing, whatever that may be?

Although i've not been in that situation, i'd make it clear that as a contractor I help out on a specific project(s).

[DirtyDog]

I can't see how the relationship in this case can be outside IR35 He wants a long term head, you convince him to bill you differently but the actual working practices are the same. The fact he doesn't understand contractors leads me to believe he will expect to treat you the same as his staff e.g. D&C. You RoS will be a joke and there will be an expectation to give you more work so MoO. HMRC will crucify you if they go talk to the client. Can't see how this can be inside at all. To the client you are a permie in the guise of a contractor.

It would need careful explanation, but I don't see it as being impossible.

"He wants a long term head..." - no impact on IR35. Length of contract is irrelevant, as long as you avoid being part and parcel of the organisation. Is it any different from taking on an implementation partner for a long-running project? Making sure that the work is clearly defined and project-related should help.

"He doesn't understand contractors..." - so explain how it needs to work. Make sure that he has it clear in his head about why you should be working this way.

MoO - as long as he understands that they don't have to give you work, then this is ideal. Make sure that they understand that they don't need to give you bits of work to keep you occupied - if there is nothing to do, then you won't expect to be paid for it.

You only need one to win the defence, remember.

[DirtyDog]

Not the one that just completed an 18 month assignment with you know who, that's for sure!

Lord Voldemort is hiring?

[NorthWestPerm2Contr]

I can't see how the relationship in this case can be outside IR35 He wants a long term head, you convince him to bill you differently but the actual working practices are the same. The fact he doesn't understand contractors leads me to believe he will expect to treat you the same as his staff e.g. D&C. You RoS will be a joke and there will be an expectation to give you more work so MoO. HMRC will crucify you if they go talk to the client. Can't see how this can be inside at all. To the client you are a permie in the guise of a contractor.

That's not how the working practices will work. The Client will need to be aware of the differences..... Especially those ones that HMRC will come after him with.

Point taken though - these will need to be clarified with them before agreeing to any assignment.

[Antman]

Provided the contract is outside of IR35 and the working arrangement is too, is there any better way to do business? i.e. I am stipulating the contract, the clauses and the way I will be working. Better than going through agency i'd say?

It's a lot better than going through an agency! However I'm sure HMRC might not take such a view. I saw in the news that they are after BBC stars who work in this way, looking for their pound of flesh I'll bet. If the MD wants you for a long time and is worried about you appearing different to the other permies then I might be a bit worried.

But if you're on top on the IR35 angle then you probably have a much tighter defence by default than others who have been audited.

I'd be interested to find out how it goes.

[northernladuk]

Provided the contract is outside of IR35 and the working arrangement is too, is there any better way to do business? i.e. I am stipulating the contract, the clauses and the way I will be working. Better than going through agency i'd say?

I can't see how the relationship in this case can be outside IR35 He wants a long term head, you convince him to bill you differently but the actual working practices are the same. The fact he doesn't understand contractors leads me to believe he will expect to treat you the same as his staff e.g. D&C. You RoS will be a joke and there will be an expectation to give you more work so MoO. HMRC will crucify you if they go talk to the client. Can't see how this can be inside at all. To the client you are a permie in the guise of a contractor.

[NorthWestPerm2Contr]

Wonder which contractors give them that idea ;-)

Not the one that just completed an 18 month assignment with you know who, that's for sure!

[northernladuk]

I know very well the 24 month rule my friend - That was confusion on the other side with how contractors are seen as short-termists...

Wonder which contractors give them that idea ;-)

[Bellona]

Just wondering if anybody has been faced with such a problem?

I have had a few conversations with an MD who is looking to increase his headcount but worried about the following things:

- HMRC and 24 month rule, also the idea of not being committed in the long-term
- Me feeling excluded because everybody else was perm
- Me acting different because of my different setup

I have tried explaining that being set-up as a business doesn't necessarily mean any of the above. The financial cost to the firm is pretty much the same and there are many benefits on their side as well (no redundancy pay, holiday/sick pay etc.)

Anybody else been faced with this scenario and how did you deal with it?

Your contract costs are 100% of time spent for days worked. Your employee costs include (but are not limited to) salary, ErNICs, management overhead, pension, SSP, healthcare, insurances, holidays and bank holidays, training, maternity provision and notice period provision....

If it was me I would answer....

HMRC and 24 month rule - applies to expenses ONLY and you have that covered - there is no automatic right to acquiring permie rights. As for being committed, you are as committed as the permie team, if not more so as the financial risks are all on your side.

Feeling excluded - you don't you are happy with the working relationship and there have been no problems on either side (assuming the latter part of the statement is true )

Acting different - the only difference could depend on whether you are in or out of IR35 (direction etc) but otherwise as per point above.

Then I would point out the cost benefits per Malvio's post.

If this doesn't tick all his boxes then you are in the lap of the gods

* I see others jumped in whilst I was typing : ), + 1 to all theirs