Furlough anyone?

[SciaticaSucks]

I was wondering if anybody inside IR35 from 6 April is concerned about Covid-19 causing clients to postpone projects and issue a contractor furlough for a few months while allowing permanent staff to continue in a BAU capacity? I could cope for a reasonable period of time but would be worried if it went on too long.

I know we have spoken about furloughs at Christmas time before but would an enforced furlough for a couple of months demonstrate a lack of mutuality of obligation? Would the fact that work has been found for permanent members of staff emphasise the difference and would this potentially demonstrate a key outside IR35 characteristic?

My existing client went to great lengths to describe all of the inside IR35 characteristics of the current working practice including the fact that there most definitely is a mutuality of obligation. They clearly stated that I would be obliged to accept any work they offered and they are obliged to offer me continual work for the duration of the contract.

Would there be any means for me to challenge the previously determined inside IR35 determination again based on this new evidence?

Thank you

[cojak]

Hmmm... Good point. We haven’t seen it yet but I wouldn’t be at all surprised if we don’t see furloughs in the very near future.

[eek]

Hmmm... Good point. We haven’t seen it yet but I wouldn’t be at all surprised if we don’t see furloughs in the very near future.

And as the OP states it will show a lack of MoO which would render the inside verdict at the very least unfair....

Now I was expecting such things to be an issue in December but given this week's news it's highly likely it's going to be sooner than that.

But is it better to offer an indefinite furlough or just terminate the contract immediately?

[Paralytic]

But is it better to offer an indefinite furlough or just terminate the contract immediately?

That was my immediate thought too - I can see the client hoping the contractor would accept, so they could get them back in if things pick up again, but any contractor put in such an open-ended position would surely immediately start looking elsewhere for a new role?

[SciaticaSucks]

But is it better to offer an indefinite furlough or just terminate the contract immediately?

Out of interest, would having the contract terminated early demonstrate a lack of MoO as well?

The contractor I sit to was told in December that his contract was terminated due to project restructure. However, around the same time one of the permies resigned and he had a stay of execution. He argued his inside SDS that the termination showed a lack of MoO and that they could not terminate a contract of employment. The client basically told him to suck it up.

[northernladuk]

Out of interest, would having the contract terminated early demonstrate a lack of MoO as well?

The contractor I sit to was told in December that his contract was terminated due to project restructure. However, around the same time one of the permies resigned and he had a stay of execution. He argued his inside SDS that the termination showed a lack of MoO and that they could not terminate a contract of employment. The client basically told him to suck it up.

Yup. They weren't obliged to give him work after the restructure, they just got rid.

You are mixing two areas up here though. the obligations within contract and the abscence of MoO once the original obligations have been completed. They are not the same thing. Don't roll it all up in to one MoO.

I wrote a long thread on MoO and furloughs which I didn't get any responses but expect there to be arguments. Ill find it and post again to maybe re-open the discussion.

[eek]

Out of interest, would having the contract terminated early demonstrate a lack of MoO as well?

The contractor I sit to was told in December that his contract was terminated due to project restructure. However, around the same time one of the permies resigned and he had a stay of execution. He argued his inside SDS that the termination showed a lack of MoO and that they could not terminate a contract of employment. The client basically told him to suck it up.

I suspect if they terminated the contract early the typical notice period is so short (say a week) it would be worked or just paid.

[northernladuk]

Have a read of my post on furloughs and MoO and feel free to disagree. No one has posted yet but I can't be completely right....

https://www.contractoruk.com/forums/...ml#post2702427

[SciaticaSucks]

No. It's a contractual term. Permies can be terminated as well. Termination is nothing to do with the obligation to offer and do work is it really. It might show financial risk but that's not really a very big point if you have the other elements of the contract correct.

Thank you NLUK but I don't think a permanent employee can be terminated. I could well be wrong but I thought their job/role could be terminated and as a consequence the employee made redundant, with all associated redundancy entitlements. The client would not be able to immediately bring in a replacement to do the same job as the permanent employee, but could of course terminate a contractor and replace them with someone else immediately.

It just a bit annoying when the client emphasises all the reasons we are exactly the same as an employee in order to generate an inside IR35 determination, and then state we have none of the characteristics of an employee should it come to redundancy or employee benefits.

[northernladuk]

Thank you NLUK but I don't think a permanent employee can be terminated. I could well be wrong but I thought their job/role could be terminated and as a consequence the employee made redundant, with all associated redundancy entitlements. The client would not be able to immediately bring in a replacement to do the same job as the permanent employee, but could of course terminate a contractor and replace them with someone else immediately.

It just a bit annoying when the client emphasises all the reasons we are exactly the same as an employee in order to generate an inside IR35 determination, and then state we have none of the characteristics of an employee should it come to redundancy or employee benefits.

You are right. I edited my reply but you beat me to it.

There is a difference between tax law and employment law sadly.