Converting from staff to contract (same company, job, desk)

[Kiltie]

A chap who reports to me has said he wants to convert from staff to contract.

Good bloke, valued team member etc.

My preference would be to have him stay staff.

Bottom line is, though, that I'd rather have him working contract for us than working contract for someone else.

I've spoken to him and I'm satisfied he's eyes wide open and his reasoning is sound.

All fine up to this point but now I'm being informed that this is impossible and the IR35 sky will fall in.

Has anyone had experience of such a situation?

[Ynox]

Isn't this a nightmare under IR35 and the specific case that IR35 was brought in to stop (i.e. perm on Friday, contractor Monday).

That said, my understanding is IR35 only affects the contractor? So you are probably 'ok' in that case. I'm not a lawyer though.

Unless the employee (sorry, correct term - contractor)'s contract has substitution clauses / he works for > 1 person etc (edit, these help avoid disguised employment), then this is likely a very bad idea for the employee. I'd definitely not consider it.

Edited by Ynox on Thursday 6th November 21:22

[CRB14]

I'd point him towards the IR35 test. Im not sure of the implications of a company for knowingly hiring a disguised employee (which is almost certainly what he would be) but I expect it would be frowned upon.

On the other hand is it not possible to declare himself INSIDE of IR35?

If I was in your situation id be a bit concerned really.

[Liszt]

It will cost you more. If you pay him the same amout it costs to employ him, he'll soon find he is not getting the best contract rate, and will be able to go elsewhere for a better rate with his first contract under his belt.

You could get someone in permie on more money than he was and still be better off than paying him a contractor rate.

What's in it for you?

Oh and I work on a contract basis. I am prepared for the big bad world that comes with it. I would not entertain someone switching that way.

[nyt]

Usually companies ban this but where I have seen this happen (some of) the rest of the staff suddenly decide that they'd like the same deal and there is a big problem.

IR35: So long as he doesn't declare himself IR35 exempt and pays his NI (employee and employers) then he won't have an issue. Or he could go through an umbrella company.

[guards red]

Is his reasoning that the relationship between him and the company will be funadmentally different?

If not, then he's still an employee. If it quacks like a duck...