Problems with contracting over 12 months?

[spig]

My current clientco is stalling over signing the next extension to my contract. Once I'm over 12 months at the same client site they have concerns about how IR35 could affect me and how my rights might change as I'll have been there over 12 months. I'm guessing here they're concerned that I'll have more rights as an employee after 12 months. However my understanding is that things only change at the point you know you will be on client site 2 years, when I won't be able to claim expenses. Is my thinking here correct?

I don't have a lot of detail yet, but there's a suggestion they might give me a 1 week enforced break to avoid any problems with me being there over 12 months.

Has anyone come across this before, in particular anything changing with regards to IR35 after 12 months at same clientco?

[Qdos Contractor]

Nothing changes from an IR35 perspective after 12 months. The 24 month rule doesn't affect IR35 either. I think your client needs some education on IR35 (to be honest, it's a common misconception).

A 1 week enforced break would be a complete waste of time.

[badger7579]

Once I'm over 12 months at the same client site they have concerns about how IR35 could affect me...

What do they care? Its nothing to do with them..

I'm guessing here they're concerned that I'll have more rights as an employee after 12 months.

No you don't

my understanding is that things only change at the point you know you will be on client site 2 years, when I won't be able to claim expenses

I believe its actually from the point you know you will be on the client site over 2 years..

[SueEllen]

You should really do a search on the forum before posting. As this as absolutely nothing to do with IR35.

Firstly the contract between you and your client should be a business contract between your company (or umbrella company) and the client company for your company to provide services not you as an individual.

This means that you are not an employee of the client company but an employee of your company (or umbrella company)

Your only rights as an individual in regards to employment legislation in the client company are limited to health and safety laws and discrimination laws. You do not get any other employee rights regardless of how long your company provides services at the client company. This means you have no redundancy rights, unfair dismissal rights etc regardless of how long you have been at the client company as you are not an employee.

IR35 is a tax law. This has nothing to with anything else. If you fall under IR35 you do not gain any more employment rights from the client company regardless of how you operate.

The 2 year rule is again a different tax regulation and indicates when a temporary place of work becomes permanent. And taking a one week break is meaningless under this rule.

In addition if you were an employee of client company taking one weeks break would not necessary break the fact they are your employers. I personally know lawyers who deal with contracts and employment legislation, and have been told that the break needs to be something over 3 months.

If you are an agency temporary employee then the law is more complex but even then a one week break wouldn't mean they were not your employers if a court decided they were joint employers with your agency.

[Maslins]

They're probably thinking of things like unfair dismissal which kicks in after 12 months.

Like SueEllen says, IR35 is purely tax law relating to your Limited Company. As far as the business supplying the work is concerned, they treat you as an external supplier (non employee) regardless of whether you fall inside IR35 or not.

[spig]

They're probably thinking of things like unfair dismissal which kicks in after 12 months.

Like SueEllen says, IR35 is purely tax law relating to your Limited Company. As far as the business supplying the work is concerned, they treat you as an external supplier (non employee) regardless of whether you fall inside IR35 or not.

Is unfair dismissal relevant when I'm an employee of my own Ltd company? Surely this is irrelvant as they don't employ me. If they choose to terminate my contract then this can't be unfair dismissal can it?

I think they were worried about my rights changing mainly as this would advrsely affect them. They were also saying that it could be bad for me because of IR35 as an aside. That's my problem and I'm not too woried about it seeing the responses above as my understanding was correct. I am concerned that they have some incorrect idea about how my rights change, particularly if I'm forced to take a week off because of a misunderstanding.

[Maslins]

Is unfair dismissal relevant when I'm an employee of my own Ltd company? Surely this is irrelvant as they don't employ me. If they choose to terminate my contract then this can't be unfair dismissal can it?

Yes, sorry, my post wasn't clear. If you were a standard PAYE employee, then unfair dismissal rules kick in after 12 months. As a contractor (whether inside or outside IR35), unfair dismissal rules never apply, as they only apply to employees.

All I was suggesting was that the firm providing you with the work may not understand this, and that could be leading to them (unnecessarily) have concerns.

[spig]

Yes, sorry, my post wasn't clear. If you were a standard PAYE employee, then unfair dismissal rules kick in after 12 months. As a contractor (whether inside or outside IR35), unfair dismissal rules never apply, as they only apply to employees.

All I was suggesting was that the firm providing you with the work may not understand this, and that could be leading to them (unnecessarily) have concerns.

I see. I think this is one for my agent to deal with, that's what I pay them for.

[Archangel]

I see. I think this is one for my agent to deal with, that's what I pay them for.

You pay your agent? I was an IT contractor for 21 years (until may this year) and in all that time the agent always paid me via my company, I never paid the agent.

I was at one client for over 6 years and was investigated for IR35 and found to be outside.

[TykeMerc]

The 12 month (or variations on a theme) rules of some clients are largely based on misconceptions that professional contractors are like temps so can possibly claim employment rights after a period. Unlike temps we're already employed by our own Ltd's or umbrella type organisations.

Unfortunately the misconception is driven by clueless HR departments and is all too common with corporates.