UKC

hi guys, fairly new to the freelancing thing and something has come up about pay in December. If anyone is savvy with things like this I could do with some advice.

I've got a 9 month contract at the moment which has the following as details on pay -

"£xxxxx p.a. pro rata for 9 months i.e. £xxxxx invoiced monthly in arrears. For days not worked there would be deduction of £xx per day"

With it being Christmas as discussed I've got my invoice in early and the accounts guy has said (after speaking to HR) that I need to knock off two day not worked due to the bank holidays (when the company is closed).

Is that correct?

In reply to Scarab9:

Yes, probably. I doubt you are entitled to any BH or other holiday pay hence the many £x's. If you were it would be in your contract, but as HR say no, it's a likely a no.

In reply to Scarab9:

Answered your own question really Contractors only get paid for hours worked.

In reply to Lukeva:


hmm...to complicate things,

there's no reference in the contract at all to paid leave. some digging suggests due to the Working Time Regulations (1998) that in this case I may be due to statutory leave which would be 28 days per year (pro rata), which would then cover these days.

anyone know if I'm following this right?

In reply to Scarab9:

If you're generally a contractor, which probably means you're a limited company, you need to split the layers.

Your company (or you as a sole trader, but this can lead to problems if you work in the same place a lot, as you can be considered an employee) invoices the customer for work done. This is a business-business transaction and there are no employment rights associated to it whatsoever.

You are employed by and paid by your company, from which you probably draw a wage or salary. You are entitled to such things as leave.

So you are responsible to give *yourself* 28 days annual leave pro-rata, but you have to cover the cost of this from your company's income. Similarly you would, if sick, be responsible for paying yourself statutory sick pay.

So no, you can't bill any days other than those actually worked. It doesn't matter why they weren't worked.

Neil

In reply to Scarab9:

That's how it works with all of my contractors. You get paid for the days you work. Sick days, holidays & bank holidays are all days you don't work.

Incidentally, we don't normal calculate a pro-rate p.a. 'salary', we just negotiate an hourly rate.

In reply to Neil Williams:

Hi Neil,

not a limited company, but I think having gone through various info that you're right that leave would come, effectively, from myself and not the company. ah well!

cheers guys.

In reply to Scarab9:


This is correct. You need to get yourself out of the "employee" mindset. If you don't have your own company (you should probably consider it though if you're going to be doing this in the long term) you're essentially a sole trader. The contract is purely business to business.

In reply to Scarab9:

You might need to consider becoming a limited company because:-

http://en.wikipedia.org/wiki/IR35

Almost all IT contractors I know are. Often because of the above companies won't take you on otherwise.

Neil

In reply to Scarab9:

Or you could operate under an "Umbrella Company". The first time I did this sort of work I had a Limited Company. The second time I just went with an "Umbrella Company" It was a lot less hassle but it could be slightly disadvantageous. Thre same applies however you only get paid for hours worked.

In reply to Scarab9:

Take a read of this, you could be considered an employee regardless of how you get paid:

http://www.freelanceadvisor.co.uk/resources/am-i-an-employee-self-employed-...

in which case you could claim holiday etc even though you believed you were working as a freelancer.

In reply to higherclimbingwales:

As a contractor, I would not go down this route. The whole disguised worker greyness is a nightmare and I know that if I started asking for pay for holidays there would be no renewal at the end of contract.

In reply to Mr Trebus:
If OP is a genuine self employed contractor he should not be trying to get both the benefits if self employment and that of employment.

In reply to Scarab9:
It is not as straight forward as many think and can't be simply answered here - you may or may not be actually employed or treated as employed in the eyes of the law.
Also irrespective of what the employment legislation says to complicate matters from an HMRC tax point of view, you may not be classed as self employed even if you think and the company you are doing work for think you are, if you can't show genuineness for example more than one company you are doing work for during the year (usually two or three min). In the past many tried the self employed route for the tax benefits and HMRC became wise to it. That's partly why so many formed limited companies - different legislation.
That said, I know of one person who had to pay NI and tax twice - once thro his contract with the company he was doing work for, and once thro his own "company" as he was was the only employee of his company and was shown to be only doing work for one third party company all year and several years in a row and on their terms with regard to times, days, etc. A painful lesson learnt and resulted in him ceasing trading, and joining the ranks of employed.
If you are intending to carry on being self employed after the nine months doing work for the same company (employer?), suggest you go and get a good accountant to advise so that you do not fall foul of HMRC fraud dept.

In reply to higherclimbingwales:

But then you will probably find yourself without work, as the company probably don't want an employee.

Neil

In reply to Climbing Pieman:
Agreed. If you want a job, look for a job. If you want a contract, look for a contract. While it may not legally be fraudulent, it's certainly sly in my book to go looking for one then try to turn it into the other[1]. I would look on it very unkindly were I the employer of someone pulling such a trick, and would be looking through the contract for the first opportunity to terminate it.

[1] In that way I mean. It's fine to discuss becoming an employee with your boss if you're a contractor or vice versa - but you should expect to get less money in exchange for the benefits of being an employee, because the costs to your employer are higher as well.

Neil

In reply to Neil Williams:

It's not about pulling a fast one as The Pieman pointed out - it's how HMRC will look at it.

In reply to higherclimbingwales:

In income tax terms you're right, but what the OP was saying (to assert a right to something not in the contract when you entered the situation as a contractor i.e. a business to business transaction) isn't really morally right either.

Neil

In reply to Scarab9:

Not strictly relevant to the self-employed contract thing, but when working as an employee but on a hourly basis (marking work), I was paid 'holiday' pay (pro rata) but as an additional percentage of pay on top of the base pay rate (about 7% I think?).

Another point about self-employed vs employee - if you are a genuine contractor then you should be able to substitute yourself with someone else equally competent. For example my friend is a fencing coach - he could substitute himself with another fencing coach if he was unable to make a session and would still fulfil the contract. If the company expects YOU, not just someone to do your WORK, then you may be an employee.

In reply to Neil Williams:

Even trading as a Limited Company can run into IR35 issues, there is a series of tests on the HMRC website you can look through, each gives a number of points and your total has to be high enough if you are investigated.