Subcontractors get redundancy benefits?
Discussion
I work for a services company who farm me out to a banking company on a yearly contract. I have been working at the banking company for seven years. I've been told that if the banking company decides I am no longer required i.e redundant, I am entitled to the same redundancy benefits as a full timer of the bank.
I would consider this complete wollox if it hadn't come from a manager in a blue chip company who states she has had to provide the same benefits to her contractors.
Anyone any info on this?
I would consider this complete wollox if it hadn't come from a manager in a blue chip company who states she has had to provide the same benefits to her contractors.
Anyone any info on this?
erolb said:
I work for a services company who farm me out to a banking company on a yearly contract. I have been working at the banking company for seven years. I've been told that if the banking company decides I am no longer required i.e redundant, I am entitled to the same redundancy benefits as a full timer of the bank.
I would consider this complete wollox if it hadn't come from a manager in a blue chip company who states she has had to provide the same benefits to her contractors.
Anyone any info on this?
Sounds bI would consider this complete wollox if it hadn't come from a manager in a blue chip company who states she has had to provide the same benefits to her contractors.
Anyone any info on this?
ks to me... you telling me you are in fact employed by the bank and not the services company?Who pays you your wage into your bank account?
So If I as a contractor who own the services company actually work for a place long enough then Im due redundancy? I hope not as that would break my IR35 and I would be screwed... I do hear that some companies do a limit on contractors of 4-5 years and get rid so they cant be seen as employees but thats in the eyes of the tax man.
You might be interested in this legal case from a couple of years ago -
Agency workers and employment status
The Court of Appeal, on 10 April 2003, allowed an appeal against the decision of an Employment Appeal Tribunal (EAT) in the case of Raymond Franks v. Reuters Ltd and First Resort Employment Ltd. The EAT had confirmed the decision of the earlier employment tribunal, that Mr. Franks was not an employee of Reuters as he was supplied as a temporary worker under a contract between Reuters and First Resort, an employment agency.
Mr. Franks worked for Reuters between 1993 and 1999. During that time, Reuters paid a fee to First Resort for his services and First Resort paid him wages for the number of hours he worked. He received holiday pay but not sick pay. When his services were dispensed with in 1999, he entered a complaint of unfair dismissal against Reuters and claimed redundancy pay and damages for breach of contract. The original employment tribunal ruled that Mr. Franks was not an employee of either Reuters or First Resort, and this was upheld by the EAT on appeal.
The Court of Appeal confirmed that a principal factor in deciding whether an individual is an employee in the context of employment law is "mutuality of obligation". As Mr. Franks was supplied by an employment agency, he was entitled to stop working for Reuters at any time, and Reuters were able to bring his work to an end at any time. However, the Court of Appeal decided that, in deciding whether or not there was "mutuality of obligation", the original tribunal had not properly addressed the issue of whether, on the evidence, a contract of employment could be implied from the circumstances of his work for Reuters.
In this particular case, the Court of Appeal considered two areas where the nature of Mr. Franks work could indicate employment. One was the various documents that indicated the internal rules under which he worked, the other was the length of time he worked for Reuters. On this latter point, Lord Justice Thorpe stated:
"Whilst I would agree that a person cannot become an employee simply by reason of the length of time for which he does work for the same person, the tribunal appear to have treated the evidence of length of service as irrelevant to the employment issue. In my judgment, it is not irrelevant evidence in the context of an individual who sought a temporary placement through an employment agency, but was then allowed to stay working in the same place for the same client for over five years, during which period he was re-deployed. Dealings between parties over a period of years, as distinct from the weeks or months typical of temporary or casual work, are capable of generating an implied contractual relationship."
The Court of Appeal allowed the appeal and remitted the case for a re-hearing by a fresh tribunal in order to determine whether Mr. Franks, in the light of all of the evidence, was an employee to a fresh employment tribunal.
The normal approach to employment status issues is that, if a worker is supplied by an agency that is a limited company, under a contract between that agency and the client, the worker is not an employee and the client does not have to consider any employment status issues. This Court of Appeal decision indicates that there are situations where an agency worker could be considered to be an employee if the contract has continued for a number of years and the nature of the work indicates that some "mutuality of obligation" has developed.
(Source: www.courtservice.gov.uk/judgmentsfiles/j1694/frank...
... back to 2 May 2003
Agency workers and employment status
The Court of Appeal, on 10 April 2003, allowed an appeal against the decision of an Employment Appeal Tribunal (EAT) in the case of Raymond Franks v. Reuters Ltd and First Resort Employment Ltd. The EAT had confirmed the decision of the earlier employment tribunal, that Mr. Franks was not an employee of Reuters as he was supplied as a temporary worker under a contract between Reuters and First Resort, an employment agency.
Mr. Franks worked for Reuters between 1993 and 1999. During that time, Reuters paid a fee to First Resort for his services and First Resort paid him wages for the number of hours he worked. He received holiday pay but not sick pay. When his services were dispensed with in 1999, he entered a complaint of unfair dismissal against Reuters and claimed redundancy pay and damages for breach of contract. The original employment tribunal ruled that Mr. Franks was not an employee of either Reuters or First Resort, and this was upheld by the EAT on appeal.
The Court of Appeal confirmed that a principal factor in deciding whether an individual is an employee in the context of employment law is "mutuality of obligation". As Mr. Franks was supplied by an employment agency, he was entitled to stop working for Reuters at any time, and Reuters were able to bring his work to an end at any time. However, the Court of Appeal decided that, in deciding whether or not there was "mutuality of obligation", the original tribunal had not properly addressed the issue of whether, on the evidence, a contract of employment could be implied from the circumstances of his work for Reuters.
In this particular case, the Court of Appeal considered two areas where the nature of Mr. Franks work could indicate employment. One was the various documents that indicated the internal rules under which he worked, the other was the length of time he worked for Reuters. On this latter point, Lord Justice Thorpe stated:
"Whilst I would agree that a person cannot become an employee simply by reason of the length of time for which he does work for the same person, the tribunal appear to have treated the evidence of length of service as irrelevant to the employment issue. In my judgment, it is not irrelevant evidence in the context of an individual who sought a temporary placement through an employment agency, but was then allowed to stay working in the same place for the same client for over five years, during which period he was re-deployed. Dealings between parties over a period of years, as distinct from the weeks or months typical of temporary or casual work, are capable of generating an implied contractual relationship."
The Court of Appeal allowed the appeal and remitted the case for a re-hearing by a fresh tribunal in order to determine whether Mr. Franks, in the light of all of the evidence, was an employee to a fresh employment tribunal.
The normal approach to employment status issues is that, if a worker is supplied by an agency that is a limited company, under a contract between that agency and the client, the worker is not an employee and the client does not have to consider any employment status issues. This Court of Appeal decision indicates that there are situations where an agency worker could be considered to be an employee if the contract has continued for a number of years and the nature of the work indicates that some "mutuality of obligation" has developed.
(Source: www.courtservice.gov.uk/judgmentsfiles/j1694/frank...
... back to 2 May 2003
russ_a said:
I thought the same but I was speaking to a friend last night and his employer has just gone bust and all the sub contractors got paid the same redundancy as everyone else.
The term "sub-contractor" is too vague.Are these "sub-contractors" EMPLOYED through an EMPLOYMENT agency or are they self-employed (sic) sub-contractors?
How they are treated can depend very much on their status.
Employment law will sometimes include people as "employees" who were never taken on by formal employees of an organisation -i.e. their tax status may be ignored if other issues are at stake such as an employer's liability claim, an unfair dismissal case, an constructive dismissal case, redundancy etc.
russ_a said:
No agencies involved from what I gather, was a building firm that went bust. So lots of sub contractors who had been 'working' for the same firm for well over two years.
Again, I would have said rubbish but the guy I was speaking to seemed well informed engough to know.
So inessence the building company get the work in and they then sub contract it out... making them employees of the building company as no middle man is involved.Again, I would have said rubbish but the guy I was speaking to seemed well informed engough to know.
russ_a said:
No agencies involved from what I gather, was a building firm that went bust. So lots of sub contractors who had been 'working' for the same firm for well over two years.
Again, I would have said rubbish but the guy I was speaking to seemed well informed engough to know.
In many (if not most) SME building companies the majority of 'self emplyed subcontractors' are this in name only. Literally the only thing that makes them self emplyed is thier pay method. Everything else puts them clearly into the 'employee' status, particularly the legal sense.Again, I would have said rubbish but the guy I was speaking to seemed well informed engough to know.
erolb said:
I work for a services company who farm me out to a banking company on a yearly contract. I have been working at the banking company for seven years. I've been told that if the banking company decides I am no longer required i.e redundant, I am entitled to the same redundancy benefits as a full timer of the bank.
I would consider this complete wollox if it hadn't come from a manager in a blue chip company who states she has had to provide the same benefits to her contractors.
Anyone any info on this?
Any PAYE contractos employed directly by the bank are for redundancy purposes little diffeent froma PAYE permanent member of staff. We have here who are on 'contract' in this way and have been treated in the same way as permanent employees for redundancy purposes.I would consider this complete wollox if it hadn't come from a manager in a blue chip company who states she has had to provide the same benefits to her contractors.
Anyone any info on this?
It is quite possible that you may become redundant from your employer if they cannot get you onto other contracts. Unlikely scenario is that you have been employed as a fixed site employee and are contractually linked to that site so loss of contract equals redundancy. Despite this, they should go down the route of redeployment ie getting you onto another of their contracts.
It is altogether a different situation if you are 'no longer required' and the reason being they are going to bring the work in-house.
Eric- any idea what the final result of that case was when it went to appeal?
Erol- It depends on far too many factors for Eric, or indeed any solicitor to answer that question.
THe default assumption in your situation is that you are not entitled to any redundancy benefits as you are emplyed by the service company and not the bank
However, if you can prove that all other factors strongly suggest that you are no different to any other employee of the bank then you might have a case to argue you are an emplyee thus entitled to the benefits.
However- it is unlikely to be worth the effort. THis kind of case has such a big impact on the way the bank conducts business that they will appeal at ever level even if you do win thus would last fo years and cost you a fortune, not to mention stress, plus a very good chance that you will fail!
Erol- It depends on far too many factors for Eric, or indeed any solicitor to answer that question.
THe default assumption in your situation is that you are not entitled to any redundancy benefits as you are emplyed by the service company and not the bank
However, if you can prove that all other factors strongly suggest that you are no different to any other employee of the bank then you might have a case to argue you are an emplyee thus entitled to the benefits.
However- it is unlikely to be worth the effort. THis kind of case has such a big impact on the way the bank conducts business that they will appeal at ever level even if you do win thus would last fo years and cost you a fortune, not to mention stress, plus a very good chance that you will fail!
russ_a said:
No agencies involved from what I gather, was a building firm that went bust. So lots of sub contractors who had been 'working' for the same firm for well over two years.
Again, I would have said rubbish but the guy I was speaking to seemed well informed engough to know.
I laid off a team made up of a mixture of agency temps, permanent employee and PAYE fixed term contractor. I didn't pay them all the same redundancy money but they were all treated equally. We had no legal obligations to the agency temps but sometimes HR people and/or companies can be 'nice'.Again, I would have said rubbish but the guy I was speaking to seemed well informed engough to know.
blindswelledrat said:
Eric- any idea what the final result of that case was when it went to appeal?
Erol- It depends on far too many factors for Eric, or indeed any solicitor to answer that question.
THe default assumption in your situation is that you are not entitled to any redundancy benefits as you are emplyed by the service company and not the bank
However, if you can prove that all other factors strongly suggest that you are no different to any other employee of the bank then you might have a case to argue you are an emplyee thus entitled to the benefits.
However- it is unlikely to be worth the effort. THis kind of case has such a big impact on the way the bank conducts business that they will appeal at ever level even if you do win thus would last fo years and cost you a fortune, not to mention stress, plus a very good chance that you will fail!
That was my assumption entirely. There is no way I could fight this against one of the biggest global conglomerates. Unless I had eaten three Shredded Wheat.Erol- It depends on far too many factors for Eric, or indeed any solicitor to answer that question.
THe default assumption in your situation is that you are not entitled to any redundancy benefits as you are emplyed by the service company and not the bank
However, if you can prove that all other factors strongly suggest that you are no different to any other employee of the bank then you might have a case to argue you are an emplyee thus entitled to the benefits.
However- it is unlikely to be worth the effort. THis kind of case has such a big impact on the way the bank conducts business that they will appeal at ever level even if you do win thus would last fo years and cost you a fortune, not to mention stress, plus a very good chance that you will fail!
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