Negotiating contract for to-be self-employed law graduate
Discussion
Dear all
My girlfriend has just returned from a trial-day following a successful interview for an organisation for which she's considering spending 6 months to 1 year working.
She has just let me know that the position is not actually salaried but will be contracted as her being self-employed. I don't have the specific details to hand as she's only just been in touch but I understand the organisation give specialist legal aid; she is due to graduate in law this year.
She is not experienced in negotiation or particularly commercially minded but does not want to be taken advantage of by an unfavourable contract.
Compared to a salaried position of the equivalent, what kind of uplift could be expected to be a contractor, given the lack of (presumably) job security and costs (NI, benefits, etc) that an employer would have to bear for a salaried employee?
I appreciate salaried vs contractor gets brought up often but as this is for a graduate I'm unsure if the scaling is similar as someone more senior in highly paid roles.
She is pretty confident they want her and will be well qualified and in a position where she could pick up other legal work quite easily (law finalist at Oxford, predicted a 1st).
The advertised 'salary' is £22k but having spoken to another employee, she was advised to negotiate carefully as some others in the same position are on a gross as low as £17k due to not understanding the pay structure they agreed. She is not looking to take the piss though as she is keen on the work this organisation is offering.
Would be very grateful of any advice that might help.
My girlfriend has just returned from a trial-day following a successful interview for an organisation for which she's considering spending 6 months to 1 year working.
She has just let me know that the position is not actually salaried but will be contracted as her being self-employed. I don't have the specific details to hand as she's only just been in touch but I understand the organisation give specialist legal aid; she is due to graduate in law this year.
She is not experienced in negotiation or particularly commercially minded but does not want to be taken advantage of by an unfavourable contract.
Compared to a salaried position of the equivalent, what kind of uplift could be expected to be a contractor, given the lack of (presumably) job security and costs (NI, benefits, etc) that an employer would have to bear for a salaried employee?
I appreciate salaried vs contractor gets brought up often but as this is for a graduate I'm unsure if the scaling is similar as someone more senior in highly paid roles.
She is pretty confident they want her and will be well qualified and in a position where she could pick up other legal work quite easily (law finalist at Oxford, predicted a 1st).
The advertised 'salary' is £22k but having spoken to another employee, she was advised to negotiate carefully as some others in the same position are on a gross as low as £17k due to not understanding the pay structure they agreed. She is not looking to take the piss though as she is keen on the work this organisation is offering.
Would be very grateful of any advice that might help.
It's something she's looking to do to gather experience in a specific field before she applies for post graduate. She doesn't expect to be there more than a year, it's not at all for the money otherwise she would be taking a full-time commercial role. She just doesn't want to agree a bad deal as ultimately this will help fund her post-graduate studies.
If she's a law grad she should look up the HMRC guidance on IR35 and figure out whether it will apply in her situation. Sounds like a distinct possibility.
As an aside, unless she desperately wants to be an academic she'd be better off finding a training contract that doing a BCL though (IMHO...) - if indeed that's what she intends to do as her post grad. You might get more guidance on the jobs / employment part of the site. Good luck to her in whatever she decides to do.
As an aside, unless she desperately wants to be an academic she'd be better off finding a training contract that doing a BCL though (IMHO...) - if indeed that's what she intends to do as her post grad. You might get more guidance on the jobs / employment part of the site. Good luck to her in whatever she decides to do.
Ean218 said:
She'll be a crap lawyer, she needs to do something else.
This sounds harsh but I'm afraid it does have an element of truth. If she is about to graduate with a 1st from Oxbridge then why on earth can's she sort out her own contract? This really did ought to be like asking a graduate mechanical engineer to change a wheel. If it's just about the numbers then a rule of thumb I use is that you take the salary they offer and divide by £100 to get a daily rate. So a £30k pa job is worth £300 a day, a £40k job £400 a day. Give or take, maybe a tad less depending upon your industry.
If the employer says "pro rata salary" then you are about to get screwed if you tell them anything other than "no".
In terms of costs, if she goes Sole Trader she will need PL insurance (£250 pa) and her own set of accounts with a tax return (£300-400).
She needs to watch out for IR35. A year contract looks an awful lot like a hidden employee. IR35 doesn't apply to ST contractors, only Ltd Co employees.
If she has to set up her own Ltd Co with her as a director she will need £100 to Companies House, and a set of company accounts, and to pay 20% corporation tax on the annual profits, from which then comes her salary. She will also be liable for employer and employee NI on her salary but not on her bonus.
My money says that the employer wants to set her up as £22k a year pro rata, which divides up as just under £100 a day assuming 227 worked days a year (52 x 5 - 5 x 5(hols) - 8(BH)) or £1833 pcm self employed in which case she is getting royally screwed. If she is not able to sort her way through this and negotiate a decent deal then if she is going to get anywhere in the law or as a self employed person she needs to get a sight more savvy and a sight harder very quickly indeed. If she wants to tackle law and self employed at the same time then I hope for her sake that she has resources of toughness and resourcefulness that far exceed the average 20-odd year old, in addition to her undoubted intelligence. From what you have said this does not yet appear to be the case.
Who's Professional Indemnity cover? Will she be covered under theirs or will she have to take out her own? Not my industry but I can't imagine it being cheap for a newly qualified lawyer.
As others have said it appears to be grossly underpaid. I'd expect at least £25k on a salaried basis. On S/E add:
14% for NIC
5% for pension
so say £30k at least. Factor in potential loss of earnings for sickness - she could cost this by looking at how much an insurance policy would be. AND, don't forget the PI Cover.
As others have said it appears to be grossly underpaid. I'd expect at least £25k on a salaried basis. On S/E add:
14% for NIC
5% for pension
so say £30k at least. Factor in potential loss of earnings for sickness - she could cost this by looking at how much an insurance policy would be. AND, don't forget the PI Cover.
Performing well academically and having theoretical knowledge doesn't necessarily mean she knows the ins and outs of employment law and how the market behaves and its norms. Her lack of commerciality is through lack of scenarios where she's practiced it and, while she won't be seeking an career in commercial law, her ability to argue and reason on complex subjects is obviously very strong.
Thanks Battered for the numbers which is what I was after. She'll be negotiating on the basis of a day-rate but won't be looking to over-leverage the Oxbridge angle as the position gives experience which is quite highly sought after and the other 'employees' working there are predominantly Oxbridge and LSE grads anyway.
Thanks for the steer, I appreciate it was a bit of an anomaly of a question given the circumstances.
Edit - will raise the PI point, thanks. They operate as a charity and I believe she will be a para to one of their employed solicitors.
Thanks Battered for the numbers which is what I was after. She'll be negotiating on the basis of a day-rate but won't be looking to over-leverage the Oxbridge angle as the position gives experience which is quite highly sought after and the other 'employees' working there are predominantly Oxbridge and LSE grads anyway.
Thanks for the steer, I appreciate it was a bit of an anomaly of a question given the circumstances.
Edit - will raise the PI point, thanks. They operate as a charity and I believe she will be a para to one of their employed solicitors.
Edited by Complex on Friday 29th April 13:56
In what way would she be considered to be "self Employed"?
Has she set up her own legal practice?
Is she running her own law firm or a firm of solicitors?
Is she allowed to by the rules of her qualification at this stage in her career?
Has she already obtained a number of clients or does she intend tro?
Is she advertsing?
Has she set up her own place of business?
It sounds to me that her new "employers" are trying to categorise her as "self employed" to saisfy their own tax agenda.
She doesn't sound to me like someone whop really is "self employed" and, as I ask above, there may be professional restrictions on someone like her being able to classify herself as "self employed" without the right qualifications, paractising certificates and professional indemnity insurance in place.
Note that IR35 NEVER applies to those who are operating as "self employed". IR35 applies to entities which are acting as an intermediary between the two parties involved. In other words, if an employer engages a person but insists they set up as a limited company, the limited company is the intermediary and IR35 could very well apply.
Has she set up her own legal practice?
Is she running her own law firm or a firm of solicitors?
Is she allowed to by the rules of her qualification at this stage in her career?
Has she already obtained a number of clients or does she intend tro?
Is she advertsing?
Has she set up her own place of business?
It sounds to me that her new "employers" are trying to categorise her as "self employed" to saisfy their own tax agenda.
She doesn't sound to me like someone whop really is "self employed" and, as I ask above, there may be professional restrictions on someone like her being able to classify herself as "self employed" without the right qualifications, paractising certificates and professional indemnity insurance in place.
Note that IR35 NEVER applies to those who are operating as "self employed". IR35 applies to entities which are acting as an intermediary between the two parties involved. In other words, if an employer engages a person but insists they set up as a limited company, the limited company is the intermediary and IR35 could very well apply.
Thanks for raising the questions Eric, I'll bring them to her attention to be addressed by the employer. The answer to them is 'No', though.
She will not have her own clients, she will give assistance to solicitors who under the charity (the employer) giving legal aid. I don't know the ins and outs. The charity status of the organisation and the fact I anticipate that many of the staff of the level she's applying for use it as a means to get experience in the field and therefore turnover may be high but I'm speculating.
Ultimately most of these opportunities for this type of experience are unpaid (due to their desirability among graduates) so it's not critical and she will probably take the position regardless, we thought it worth being diligent though.
Thanks again for all your input.
She will not have her own clients, she will give assistance to solicitors who under the charity (the employer) giving legal aid. I don't know the ins and outs. The charity status of the organisation and the fact I anticipate that many of the staff of the level she's applying for use it as a means to get experience in the field and therefore turnover may be high but I'm speculating.
Ultimately most of these opportunities for this type of experience are unpaid (due to their desirability among graduates) so it's not critical and she will probably take the position regardless, we thought it worth being diligent though.
Thanks again for all your input.
It is very unfair that employers should try to insinuate to recruits that somehow they can be engaged on a "self employed" basis. HMRC would not be impressed at all with such an approach.
And, to be honest, any employer who takes on staff in this way is taking a big risk in regards to a potential assessment to unpaid PAYE and NI if they are ever investigated by HMRC at a later date.
The term "self employed" should only apply to those who really are "self employed" i.e engaged in business on their own account - with all the normal attributes of running a business that one would expect.
And, to be honest, any employer who takes on staff in this way is taking a big risk in regards to a potential assessment to unpaid PAYE and NI if they are ever investigated by HMRC at a later date.
The term "self employed" should only apply to those who really are "self employed" i.e engaged in business on their own account - with all the normal attributes of running a business that one would expect.
Eric Mc said:
It is very unfair that employers should try to insinuate to recruits that somehow they can be engaged on a "self employed" basis. HMRC would not be impressed at all with such an approach.
And, to be honest, any employer who takes on staff in this way is taking a big risk in regards to a potential assessment to unpaid PAYE and NI if they are ever investigated by HMRC at a later date.
The term "self employed" should only apply to those who really are "self employed" i.e engaged in business on their own account - with all the normal attributes of running a business that one would expect.
+1And, to be honest, any employer who takes on staff in this way is taking a big risk in regards to a potential assessment to unpaid PAYE and NI if they are ever investigated by HMRC at a later date.
The term "self employed" should only apply to those who really are "self employed" i.e engaged in business on their own account - with all the normal attributes of running a business that one would expect.
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