UKC

Hey, I'm wondering if anyone would be able to help me? This morning I was emailed a copy of a one year contract by a recruitment agency, and there are a few items in it that I am not comfortable with. This is my first real job, never mind my first contract, so I'm hoping there might be some contract workers on here that could give me some advice?

As a bit of background whilst trying to remain anonymous, I recently had a successful interview with a large manufacturing company. I applied for the job online through an agency. Whilst the agency guy was talking about a yearly salary before the interview, after I was successful he was quick to point out that I would be paid on a daily rate basis as a contract worker, and my tax and NI etc. would go through an umbrella company. Simple enough, I thought.

However, in the contract I am listed as a 'Consultant', working for a company/'Serive Provider' registered in England and Wales, but with a head office at my home address in Scotland. Apparently they cannot pay me until I provide them with a copy of my company's Certificate of Incorporation, my company's bank details, and if applicable, my company's VAT registration certificate. What the hell?! Do I have to register a company? Do I need a business bank account to pay myself? All I want is to get paid!

The second thing is Conduct Regulations 2003. I had no idea what this was until this morning, but quickly found out that they wanted me to opt out. Through some internet research I have found that this could be a bad move, and indeed, in the current contract I cannot seek permanent employment with the manufacturing company without involving the recruitment agency for a year after the original contract expires. Pretty underhand if you ask me. Would you recommend I tell them I'm opting in?

Any help with this appreciated, I have a splitting headache from reading through this crap! I realise I could ask at least the first question to the agency, but having received this dubious contract mere days before I am supposed to start work, I kinda distrust them.

In reply to Taurig:

I'm a engineering sub-contractor. I don't work through an umbrella company though, and I thought that if you did, then you didnt have to set up a company/bank account etc. The umbrella company should pay you as if you were a standard employee of their company (PAYE). (as is my understanding.... I'm a ltd company tho so i do need a business account etc..)

Best thing to do is ask the company issuing the contract about it. They should understand that it's your first contract and im sure they'll be happy to advise you.
PM me if you want/need any info/advice, or if you want to name the agency as I may have had experience with them.

No idea about the Conduct Regulations im afraid.

Sorry, one last thing I should have mentioned, they are requiring me to have personal indemnity insurance for the length of the contract and for three years after, and I have to be able to provide them with evidence of that at any time. Is that normal practice? For three years after you've stopped the contract?!

In reply to Taurig: I have not been a contractor but know many have are / have.


This is pretty standard. There are many companies that will act as your umbrella and handle your tax affairs for you. They charge a slice, but it is possibly cheaper / less hassle than setting up your own limited company and filing your accounts each year.


Again, this is pretty standard and is where you will come to see agents as leeching barsterards since they will take a cut of your hourly pay.

The bottom line is that contracting can be very lucrative if you are on a good whack > £40 per hour. There are one or two tax loop holes you can risk taking advantage of and if you never go on holiday or get sick, it can be very lucrative. However, if you are not on a particularly good rate you could end up worse off than if you were in a salaried job on the minimum wage and without half the security benefits that employers have to offer full time employees.

I am sure others will fill in the gaps.

In reply to craig1983:

Thanks Craig, that's actually made things a lot clearer. So the umbrella company is basically there to act as a ltd company on your behalf, so you don't have to bother setting up your own business? If that is the case then, I don't know why they've got me down as owning a company in the contract. I will definitely have to talk this through with them.

In reply to EeeByGum:

Thanks EeeByGum, I have found a fair few threads on contractor forums (yes, such things exist!) that say it is fairly standard practice for agencies to try and get you to opt out of the Conduct Regulations as it works in their favour, but essentially you lose some rights. It seems it is illegal for them not to deal with you if you refuse to agree, although they can get quite aggressive.

In reply to Taurig:
I have been a contractor for many years, and basically most of the good loopholes have been closed.
In my opinion there are two way you can go.
1)start you own limited company and cut out the fee you will pay to the umbrella company
or
2) do as craig say go PAYE, get all the benefits, holiday paye etc

as you are new to work aswell as contracting I would take the PAYE option if I were you.

The agency maybe pushing you to go via the umbrella company as they may get a kickback for putting you on their books, and it'll save them money as they won't need to pay Employers NI, Holiday pay, Paternity pay and whatever else. (there maybe an extra bank holiday because of the Queens Jubilee in June)

about 8 years ago I did some work in a school in Salford (I'm an electrician and was working via an agency for a couple of weeks) at the time period included the bank holiday, they had to pay 8 hours holiday pay for the bank holiday, even though I only had worked for them for a few weeks.

the agency wanted me to go with the Umbrella company, but it wasn't the best thing for me.

good luck

In reply to Taurig:

Give Brooksons accountants a call on 0845 0581200

www.brookson.co.uk

They specialise in providing accountancy/support for contractor workers. They can in the space of a week set you up a company, get VAT registered, set up a business account and raise invoices for you. They are pretty helpful and can walk you through all the steps. I have used them for the last several years without any problems.

Thanks Richard and Cu Chullain. I feel the best thing to do for the simplicity would be go with an umbrella company. I'm actually an organic chemist straight out of a PhD and I didn't forsee doing contract work at all, in fact I had little idea of what it was. I believe it's relatively uncommon for scientists to work as contractors, and I would prefer a permanent contract as soon as possible. I'm not earning anything close to the £40 a day mentioned above. The question is, do I go with an umbrella company which I assume the agency are in kahoots with, or shop around?

Another thing I've just noticed is the contract says nothing about holidays, sick pay, just my hourly rate and hours per week. Is that a result of them (wrongly) pre-empting my signing of the Conduct Regulations opt out, as I believe that under Regulation 15 they have to state those terms?

http://www.dti.gov.uk/files/file24248.pdf

In reply to Taurig:

By the sounds of it, they've issued you a contract for a ltd company. Ltd companies don't get holidays or sick pay, but umbrella employees do, or should.

If its your first job, don't bother with going ltd, especially if you're going to get a permenant spot somewhere asap, since setting up and closing a company isn't free!

Like I say, just contact them and see if they've send yo uthe wrong contract

In reply to Taurig:
I believe it's relatively uncommon for scientists to work as contractors, and I would prefer a permanent contract as soon as possible.

Oh you are in for such a shock

Lots of companies are going down the route of using contracting chemists, it makes it easier to get rid of us. Apparently it makes more sense to have flexible headcount than security of the talent pool, which is why I know lots of chemists/ pharmacologists/ microbiologists who aren't on permenant staff. Can make it interesting when you need someone to sign off certain regulatory docs!

A lot of the current vacancies in my neck of the woods are contractors and it has taken me ages to find a perm position.

Good luck. I'm PAYE and I'd say it is by far the easiest option if you can manage it or get a brolly if you think you can wangle some deductions (living away to work etc).

In reply to Taurig: I've just had a similar headache, and in the process of signing up with another agency today. Would definitely reccomend going for the PAYE option under an Umbrella company - I'm with Sprite and they have been pretty good so far, although they may not be suited to your area. I would check with your agency what Umbrella companies they reccomend [if they have any specifics], then speak to each of them and see what they offer

In reply to Taurig:

You obviously shop around in exactly the same way that you do not go to the property conveyancer recommended to you by the estate agent.


Generally speaking, if you contract, you get no holiday pay. This is why hourly rates are usually a bit higher than the inequivalent salaried job. You can still take holidays, but you won't get paid whilst not working.

In reply to EeeByGum: With my company there is the option to put aside a set amount of your earnings for 'holiday pay', then take it when you want it. Unsuprisingly its an opt-out option, best sticking it in savings I think...

In reply to Taurig:
Setting up a limited company is a doddle. You can do it on the companies house website for a few tens of quid. They made it easier recently, and you don't even need a company secretary no more.

You don't need to be VAT registered if you intend to bill under a certain amount. Check the inland revenue website. And you can VAT register after the fact if you go over the amount unexpectedly.

A small local accountant will do the books and tax once a year for not a lot. You could do it yourself, but its easy if you know how and a pain if you don't. Just remember to get your invoices/timesheets out in a timely way.

You can also book charge certain expenses to your company, such as driving to the "client" site daily, heating and lighting for your home "office". (Though check the rules as the tax man is jumping up and down on contractors working long term for one employer.)

There's a few rules to follow as a ltd company (such as filing returns by a certain date), but the gov is trying to make it easy to encourage new startups.

Don't panic. A job is a job. Just check how easy it is for you to walk away. Flexibility works both ways!

OK, just off the phone with the agency guy. Apparently I am on a daily rate contract; I work the day, I get paid, I don't work, I don't get paid. They have sent me a Ltd Company contract 'for now' so I can start work on Monday, but then I'll get switched over to an umbrella company shortly after with a new contract under the umbrella company that I re-sign.

So, according to the agency guy, I cannot have a daily rate contract AND opt in. Apparently opting in means you are signing up for PAYE etc., and the this is not compatible with daily rate contract. What are peoples thoughts on this? Is it basically sign the thing or leave the job?

In reply to Reach>Talent:

Yep get used it. PhD qualified scientist, been on contracts since I finished studying in 2006. Looking for work again now and there're very few perm positions (at least in NorthWest). I think post-doc level science is especially hard as you can end up so specialised.

In reply to tallsteve:

Yep, my daughter set one up when she was 23, no problem.there are agencies out there to help free(or there was)


Good advice, my daughter got an accountant to do the return, for a few years , and is now happy to do it herself this year, now that she sees how easy it is, with previous ones to look at. But of course she has to do the spreadsheet, and file the paperwork etc, but it saves a few bob, as money is tight.

Good luck whatever you do.

In reply to Taurig:

Not in your field, but I do a lot of contracting in the IT field. As a few people above have said, setting up a ltd company should cost you little (less than £100, plenty on the web), most of the other stuff you've mentioned seems just regular tbh.

The one thing to bear in mind, is that the figure you are getting paid, is not actually your's, but goes to your company. Generally you should be able to get a large % of it, but some goes on things like company TAX/NI/Accountant fees etc, so you won't see it all.

I've never worked under an umbrella co. They take some of the hassle out, but it's not difficult. In my view you're just paying them to do something you could easily do yourself.

Get your own accountant though, that really is too much hassle to sort yourself. Allow £1,000 per year as a rough guide for this.

A lot of companies want you to have personal indemnity and public liability insurance, cost varies but probably something like £100 per year for each.

Honest, it really isn't as difficult as it seems.