Johnny E

Just looking for a bit of advise:

We are a small company me and mate run the company and we have an apprentice. Electrical.Security and cctv.
Things have been quiet last few months and just getting a wage at the moment.
The apprentice comes out his time this year so going to be on full wage, we also give him 25 days paid holiday at the moment and we have paid him if he has been off sick which is very rare. We dont want to lay him off when he comes out off his time but we cant offer him a full time job with all the benifits at the moment.

Could we take him back on self employed and he will be on a bit more money but we are covered if he goes on holiday or off sick and if we are slack we dont have to worry about paying an extra wage each month.

He's a good lad but me and my mate both have mortgage's and need to look after ourselves.

Any advice welcome

addi monster

iTrader: (6)

explain the situation to him and use him as a subcontractor, so hes self employed with no holiday pay ect,,.

scottydog137

iTrader: (2)

As far as I am aware, you can without any legal implications as long as his contract of employment is fulfilled.

However morally, i think it is wrong.

You also have to consider the extra costs to the company whilst he contracts back to yourselves, this could be considerably more than paying him a regulated wage as he can set his own rates.

Personaly if he is as good as you say he is i would let him know the situation and let him make his own decision, and offer a short term contract until he can either set up himself as self employed or find another company that can offer him full time work

Johnny E

Thanks for the replies

Its hard to know whats best

coops1

iTrader: (5)

I agree, explain the situation and let him decide what he wants to do. You could always employ him as a casual then he is on a rolling weekly contract and has no sick pay or holiday built into the contract. If he doesnt like it then he can move on, if he is happy then everyone wins.

GC8

You need to speak to your accountant. Whether the Inland Revenue will accept that he is self employed is what matters. I doubt it myself.

GlesgaKiss

I think you're spot with what you're doing. You're not trying to rip him off, you're just genuinly trying to do the best you can in the situation. If you've got a good working relationship I would explain it to him like you have here, honestly is the best policy IMO. Your only prob will be the govt, as they don't like self employed people working for the same person all the time (not that it's any of their business). Speak to your accountant as suggested, but it's not exactly the most serious thing HMRC could pull you up about.

GC8

True, but theyll fine you and youll end up paying his tax and NI if they dont agree that he qualifies.

fast bloke

Not true.

I have been self employed for 10 years, and all my income comes from a single source. If you both agree he is self employed, he is self employed. The govt won't like it if he starts paying IR35 dividends with a single income stream, but that is down to him, his accountant and the taxman.

BlkKnight

You'll need to check this. . .

I was under the impression apprenticeships were covered by a different set of law giving them much protection?

Unless the apprenticeship is complete, I think it's frowned upon to move them off.

billythekid

Ahh good old IR35.

So long as he has a contract stating he can work when he wants and if needed will supply a trained replacement if he cant work, he has to provide his own laptop, phone, transport etc and that his contract will be terminated on DD/MM/YY date then in general thats all ok. A 12 month contract is the longest I would give for IR35. I would even say 6 months.

Pay him a daily rate via a monthly invoice and thats it really.

He will have to sort out his own NIC (buttons) and SA tax too. Make sure he does understand the costs involved in that. He needs to set up his own LTD company to be tax efficient and this also helps with IR35. Budget £500-£800 ish per year for an accountant to do a fairly simple return for a one man band LTD co. An off the shelf LTD is a few hundred quid. Or he can set his own up for a lot less - but I would not advise he did that...

He will also need to put aside money for SA tax, I would advise he puts 20% to one side, then anything less and he gets a "bonus" at the end of the year.

I assume there will be no VAT liability.

HTH!!!

billythekid

Oh and corporation tax too.