Going from PAYE to contractor

**cojak** · 1 October 2012, 14:02

Do you want to be a contractor?

Your employer is pushing this onto you with all of the employment risk to you and nothing to him. You will be inside IR35, you will have to pay your own NI and tax.

Take a look at the first-timers guides, but I would go to a Citizen's Advice Bureau because this doesn't sound right to me (it sounds as if they are trying to wriggle out of their legal responsibilities to you).

**northernladuk** · 1 October 2012, 14:28

Originally posted by Chris45rpm View Post

Hi there,

In order to retain my job, I have been offered to go consultant/contractor. This after 2 years PAYE.

What are my legal rights to make this transition? Is there a length of time from accepting that has to be adhered to before this happens? What happens to the 15 days holiday I have yet to take? Does my employer have any legal adjustments to do this?

All help and comments appreciated.

thanks

This doesn't sound right. A company forcing you to go contracting? As Cojak says though, first thing to understand is what they are doing to you. You will not be keeping your job. You will not have a job. You will have a contract to do a piece of work. This contract can be pulled at anytime and will not have any of the benefits you had previously. You will be responsible for everything. HR will speak to you about your contract and nothing else. Most companies you contractors to get experts in that field and also for flexibility. Sounds like your company want to chop people but not pay redundancy or something. I certainly wouldn't be happy with this if I was a permie.

Next and equally important is to find what your rights are. I would have thought by forcing you to go contracting they would have to sever any links to you including your contract of employment. I would have thought they would have to serve you notice and pay your hols etc and then contract you to the piece of work. Where redundancy comes in to this I have no idea. I presume your HR will speak to you at length about all this during a consultancy phase or something?

And as already mentioned HR is another port of call for a very detailed chat about why they are doing this and what are you rights. They are still your HR so they should be looking after you through this process and explaining your rights/reasons/options.

Personally I would be worried giving up your rights as an employee and being kicked out on your own.

Oh being inside IR35 will also mean it affects your take home so you need to speak to HR for detailed information on how much you are going to get paid as well.

**jmo21** · 1 October 2012, 14:32

Originally posted by northernladuk View Post

Sounds like your company want to chop people but not pay redundancy or something. I certainly wouldn't be happy with this if I was a permie.

For me, this is exactly what is happening!

The only reason to stay at the same company while moving permie -> contract is if you were leaving of your own accord, they were desperate to keep you, and they offered you a great contract to stay for a while - and even then you'd be IR35 caught.

**Sally@InTouch** · 1 October 2012, 14:33

I agree with Cojak, they shouldn't be able to "make" you do this unless there are contractual terms we are unaware of.

If this is a route you do want to progress, I would urge you to speak to a contractor accountant (several advertise on this forum) and familiarise yourself with how this all works.
As a limited company director, you are legally responsible for filing and paying all company statutory accounts and returns. Failing to do so on time can result in penalties and the chance of HMRC knocking on your door.

The IR35 legislation is also important for you to understand, if there is not going to be a significant change to the work you currently do, you would fall inside and have to take your income less qualifying expenses through PAYE.

**Scrag Meister** · 1 October 2012, 15:06

Originally posted by cojak View Post

Do you want to be a contractor?

Your employer is pushing this onto you with all of the employment risk to you and nothing to him. You will be inside IR35, you will have to pay your own NI and tax.

Take a look at the first-timers guides, but I would go to a Citizen's Advice Bureau because this doesn't sound right to me (it sounds as if they are trying to wriggle out of their legal responsibilities to you).

WCS.

Obviously the rate needs to take into account the costs incurred by your employer, Employers NI, Pension, etc...?

They are making you redundant, they can't make you change to a contract basis. They should be paying you redundancy even if they then offer you a contract role.

Sounds slightly dodgy, but then we aren't aware of your current contract of employment.

GL with choosing how to proceed.

**malvolio** · 1 October 2012, 15:27

They can't make him redundant if the job still exists afterwards - which presumably it does since he's being retained to fill it. So any redundancy he gets will be treated as income and taxed at 40%.

Gets better and better, doesn't it...

**tractor** · 1 October 2012, 15:39

...

2 years = employment rights. Seems like they are trying to wriggle out of it. I bet the OP is just coming up to 2 years.

Going from PAYE to contractor