FT Employment to Consultancy Agreement

[ACC92]

Would appreciate any help/advice/guidance on the following issue:

Having been a full time employee at a company since August 2021 I was informed prior to the new year I would be having my FT hours reduced and placed on a consultancy agreement through own Ltd Co. Billing for services with an agreement that covers IR35

I have had no say on the matter with regards to the daily rate being offered and also the days worked (3 days however I have since been told the company wants the hours spread across five days now)

I haven’t been issued with any formal documents in terms of a new consultancy agreement or termination letter. The plan is for this to commence 1st March

appreciate this may be an unusual matter and I have done extensive research and been unsuccessful apart working “under protest” at my current full time employment contract.

would appreciate any help with this matter

A

[ULA]

I am struggling to understand how your employer is moving you from a full time permanent contract to a consultancy agreement on a self-employed basis.

How long have you been employed there?

If they want to change your permanent contract of employment, to reduce your hours, then they need to do this via a consultation process. Ultimately the end result could be what has become known as a "fire and rehire" situation.

Is the job on IR35 i.e. self-employed going to be the same as you are currently doing just on less hours? How is the company going to demonstrate that you are not actually an employee. For example, will you be required to provide your own equipment to do the job? Will you be able to substitute with someone else if you are not available to work on a particular day? Who will control your work? These are just a few and the answers could determine your working status.

[ACC92]

Appreciate the response ULA in answer to your above


How long have you been employed there? Since August 2021

No consultation has been done I haven’t even had any formal documents as of yet.

Is the job on IR35 i.e. self-employed going to be the same as you are currently doing just on less hours? Yes

How is the company going to demonstrate that you are not actually an employee. For example, will you be required to provide your own equipment to do the job? Yes Will you be able to substitute with someone else if you are not available to work on a particular day? Maybe. Who will control your work? Not myself

the reason for moving myself to a consultancy agreement I.e Ltd co. Is due to financial difficulties in the company. However no other employee is currently facing a reduction in hours or change to contract

thank you

[ULA]

Thanks for the further information which is really helpful.

So as I see it and only my opinion you need to consider the following:

1. Changing someone's contract of employment i.e. hours of work needs to be done via consultation and getting agreement, albeit there are mechanisms in place that they could fire and rehire on those new terms but you would still be a permanent employee.

2. They cannot move you from a permanent employment contract to a self employed contract doing the same job just on less hours. I think that potentially they would be hard pushed to prove that you were not still an employee of the business, without you having more controls over the work that you do, ability to substitute if you are unavailable and certain other key factors that would mean you work status would be self-employed.
Would you be able to work for other businesses in the remaining time that you are not working for this company?

They cannot use the reason to move you to self employed work on the same job on less hours as being financial difficulties in the business. Either it is is a change of permanent contract discussion and you remain an employee of the business on the new hours or, if there are genuinely financial difficulties and they need to make job losses, it is a redundancy process.

[ACC92]

Really appreciate your response again, so helpful

I would be able to work for other clients of my own & also if I didn’t agree to the new terms of permanent employment (if offered that) what would generally be the outcome? Leave without redundancy pay?

thank you

[ULA]

So of you are able to work under you own company for other clients as well as working for your "old company" for a certain number of hours per week then you have a better chance of being able to claim you are in fact self employed. I would suggest that you also have a very good contract in place with each of the clients you work for including your "old company" which would have some clauses in there that may it clear you are self employed.

If you do not agree to a permanent contract of employment with your employer on reduced hours then your employer might either:

1. Dismiss you
2. As I have said in an earlier post dismiss you and then offer you a new job with new terms

If they do dismiss you, you might be able to claim unfair dismissal or take other legal action against them. It depends on your situation and it can be complicated, particularly if your employer had a good business reason for making the contract change.