Umbrellas for irregular contracts

[alexp78]

Coming round full circle again: a thought on the Swedish Derogation Model, with reference to irregular contracts:

In between contracts, a worker can

1. Leave employment. Save paying any fees until next time. But not be allowed tax relief on expenses.

OR...

2. Stay employed. Continue paying fees. Claim tax relief on expenses. Claim 4 weeks pay while not working.

I still don't understand who is going to pay for the SDM commitment?

I guess I'll have to join an umbrella to find out. To be honest, option 2 sounds better.

[LisaContractorUmbrella]

But you also have to remember that under to SDM the employer has a responsibility to source work for the individual, which is why relationships between umbrellas and recruiters will be strengthened, and as there has to be mutuality of obligation within the employment contract you cannot reasonably refuse the work offered; if you did not want to take the assignment offered you would be obliged to resign.

[alexp78]

That makes it more like working for a software house but without any of the benefits of real "employment".

In other words, the umbrella will have influence or control over what work is carried out. The employee is no longer a true freelancer, determing his (or her) own destiny. But if working for a software house, real employment benefits are actually provided, such as sick pay, holidays, all expenses reimbursed, training, etc.

And the definition of "protection" proposed by the AWD/SDM is questionable, if the umbrella has the right of immediate dismissal of an employment contract. Will umbrella employees be able to take Legal Action for unfair dismissal?

Further, if the employee leaves employment (or is forced out) in between assignments, then no expenses can be tax-deductible, which possibly makes any offer involving staying away from home not viable in the first place.

[LisaContractorUmbrella]

That makes it more like working for a software house but without any of the benefits of real "employment".

In other words, the umbrella will have influence or control over what work is carried out. The employee is no longer a true freelancer, determing his (or her) own destiny. But if working for a software house, real employment benefits are actually provided, such as sick pay, holidays, all expenses reimbursed, training, etc. The contractor is at liberty to pick and chose his own assignments; the umbrella company will assist in finding new employment if the contractor doesn't have a new assignment in place towards the end of the old one. However, the contractor does not have to take the assignment; if he wanted a 6 month break or something he would simply hand in his notice.

And the definition of "protection" proposed by the AWD/SDM is questionable, if the umbrella has the right of immediate dismissal of an employment contract. Will umbrella employees be able to take Legal Action for unfair dismissal? The umbrella doesn't have the right of immediate dismissal other than in cases of gross misconduct or gross negligence but would still have to follow disciplinary procedures

Further, if the employee leaves employment (or is forced out) in between assignments, then no expenses can be tax-deductible, which possibly makes any offer involving staying away from home not viable in the first place.

If you were not working under assignment what business related expenses could you possibly claim????

[alexp78]

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QUOTED:

That makes it more like working for a software house but without any of the benefits of real "employment".

In other words, the umbrella will have influence or control over what work is carried out. The employee is no longer a true freelancer, determing his (or her) own destiny. But if working for a software house, real employment benefits are actually provided, such as sick pay, holidays, all expenses reimbursed, training, etc. The contractor is at liberty to pick and chose his own assignments; the umbrella company will assist in finding new employment if the contractor doesn't have a new assignment in place towards the end of the old one. However, the contractor does not have to take the assignment; if he wanted a 6 month break or something he would simply hand in his notice. Or choose to stay on to claim 4 weeks payments under AWD/SDM.

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And the definition of "protection" proposed by the AWD/SDM is questionable, if the umbrella has the right of immediate dismissal of an employment contract. Will umbrella employees be able to take Legal Action for unfair dismissal? The umbrella doesn't have the right of immediate dismissal other than in cases of gross misconduct or gross negligence but would still have to follow disciplinary procedures. So staying on for 4 weeks payment cannot be challenged?

--
Further, if the employee leaves employment (or is forced out) in between assignments, then no expenses can be tax-deductible, which possibly makes any offer involving staying away from home not viable in the first place. If you were not working under assignment what business related expenses could you possibly claim???? As discussed earlier in the thread, leaving employment after each assignment would mean that no expenses are tax deductible for the assignments whilst in employment.

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I apologise if the points I made are not clear. I hope this clarifies.

The subject of this thread is how umbrellas would cater for irregular contracting where this is what is required.

Leaving after each assignment makes expenses non-tax-deductible, which could be the deciding factor for taking on an assignment in the first place, especially if travelling and alternative accommodation is required. The freelancer may have to stay employed to qualify for the "overarching" employment contract quoted in other forum threads. This would be to make irregular contracting through an umbrella viable, or at least tax-efficient.

Staying on after each assignment to make expenses tax-deductible also means that under the AWD/SDM, the umbrella will have to make 4 weeks payments every time, or "get rid of" the employee somehow.

The questions (a) who pays for the 4 weeks, or (b) how the employee is removed unwillingly have not been answered. Helping find work is not a valid answer, as, again, the point of this thread is about irregular contracting where this is what the freelancer wants, or is constrained to.

As umbrellas have voiced enthusiasm for AWD/SDM, perhaps someone had better clarify what will happen for this scenario.

[LisaContractorUmbrella]

As you are enquiry about irregular contracts can you confirm whether or not you are in permanent employment and just wanting to do the contracts on the side so to speak?

[alexp78]

The issue should be addressed regardless of the person's situation.

Someone in full (or part-time) real employment in IT may well have problems doing similar work elsewhere in the first place as employment contracts usually stipulate that any significant work or inventions would be the property of the employer.

If the person had other paid work of any nature, then claiming additional AWD/SWD payment is clearly going to be questionable anyway.

It would be easiest to assume that the person does not have any other gainful employment. Perhaps he/she cannot due to another commitment such as looking after an elderly relative. Perhaps he/she chooses not to work to pursue another interest or hobby - fishing, brewing (not commercially), competing in local sports teams (not sponsored or for reward), contributing as an amateur film critic (no payment), or just doing nothing...or perhaps the person has an injury or condition or disability meaning they can only work occasionally despite wanting to be full-time.

I do not think it relevant to spell out my own situation except to say that I do not have any sinister motives.

The question is to find out whether an umbrella is appropriate for freelance work which is irregular. This is more indicative of true freelance occupations than working 52 weeks per year. In the acting profession they call it "resting" in between jobs. The latest beaurocracy now considers that an IT worker has to be protected against the possibility of "resting".

Back to the question. Being employed only for assignments means expenses are not tax-deductible: if staying away from home this is not viable at todays' rates, driven down by outsourcing. But staying employed continuously looks even better because, as well as tax-deductible expenses, there is the extra 4 weeks payment at the end of each assignment. But who is going to fund this?

[LisaContractorUmbrella]

The issue should be addressed regardless of the person's situation.

Someone in full (or part-time) real employment in IT may well have problems doing similar work elsewhere in the first place as employment contracts usually stipulate that any significant work or inventions would be the property of the employer.

If the person had other paid work of any nature, then claiming additional AWD/SWD payment is clearly going to be questionable anyway.

It would be easiest to assume that the person does not have any other gainful employment. Perhaps he/she cannot due to another commitment such as looking after an elderly relative. Perhaps he/she chooses not to work to pursue another interest or hobby - fishing, brewing (not commercially), competing in local sports teams (not sponsored or for reward), contributing as an amateur film critic (no payment), or just doing nothing...or perhaps the person has an injury or condition or disability meaning they can only work occasionally despite wanting to be full-time.

I do not think it relevant to spell out my own situation except to say that I do not have any sinister motives.

The question is to find out whether an umbrella is appropriate for freelance work which is irregular. This is more indicative of true freelance occupations than working 52 weeks per year. In the acting profession they call it "resting" in between jobs. The latest beaurocracy now considers that an IT worker has to be protected against the possibility of "resting".

Back to the question. Being employed only for assignments means expenses are not tax-deductible: if staying away from home this is not viable at todays' rates, driven down by outsourcing. But staying employed continuously looks even better because, as well as tax-deductible expenses, there is the extra 4 weeks payment at the end of each assignment. But who is going to fund this?

But, as I have tried to explain, it wouldn't work like that. The overarching employment contract that umbrella companies operate is based on continuity of employment as with any other employer. It is expected that employees will work full time (other than for holidays, sickness, maternity etc) - you wouldn't expect any other employer to pay a year's salary to someone for them then to only work for 3 months of the year when they had been taken on under a permanent contract surely?

[alexp78]

So, the conclusion for this thread is that umbrellas are not intended for a freelancer working on an irregular or part-time basis. It looks like the employee is expected to arrange his/her own continuous work less certain traditional absences such as holiday, maternity, etc. Who sets the allowances? e.g. 4 weeks holiday in the first year, adding a day or two for long service, and so on?

The intention is for full-time employment, but, save the "out of work" pay (AWD/SDM), there are none of the other benefits of proper full-time employment (training, pension, travel and accommodation arranged and fully paid for...).

The issue of how to deal (legally) with an "employee" who might not arrange their own continuous work, or accept work arranged by the umbrella, has not been addressed.

Someone who might only join an umbrella separately for each assignment they win will end up having tax relief on expenses disallowed, making an umbrella less attractive or not viable. This is a contradictory situation as irregular work is more indicative of a person truly independent.

Perhaps someone else can make a comparison of "umbrella employee" versus "agency employee". For example nurses who choose to work irregular part-time hours do so through an agency, as this freedom of availability is possibly the main factor.

[LisaContractorUmbrella]

[QUOTE=alexp78;1356019 "So, the conclusion for this thread is that umbrellas are not intended for a freelancer working on an irregular or part-time basis"

No an umbrella company is not always the best option for someone working very irregular assignments - that is what I said in the first place