Legal Q&A

QWe took on a contractor, with fees
payable to his personal company. Over the years, the agreement was renewed ad
hoc.  We now pay holiday allowance,  sick pay and overtime above contracted
working hours, which are about equal to a normal full-time employee. He is now
too expensive and we want to end the contract. Are there any problems?


ALeaving aside any IR35 issues,  the short answer is “yes”.  Other than earnings being paid on receipt of
an invoice from the contractor’s company, no evidence supports the contractor
not being an employee. Holiday pay, sickness and overtime are associated with
employed status,  and the first two are
normally incompatible with self-employed status. The person will probably be
held to be an employee by the Inland Revenue for tax and Tribunal for unfair

However, he
may not go to the Tribunal, or risk his self-employed credentials with the IR
by arguing he was an employee with you. There are obvious tax and National
Insurance problems. It is probably safest to insist that he will be treated as
an employee. The contractor may well leave unilaterally, achieving the original


QAn employee with about eight months’
service is not performing adequately. We were about to give three month’s
because previous warnings have not had any effect, but the employee was sick
the day we were due to meet.  Should we
wait until she comes back?


ANo. With eight months’ service and
three months’ notice,  the employee
would have 11 months by termination. If notice is delayed until the employee
has completed nine months, the three months’ notice would give her protection
against unfair dismissal.

If no
notice is given, she might include in any breach of contract claim the loss of
the right to claim unfair dismissal that would have accrued had three months’
notice been given.

there is any reason to suppose the employee’s disability might be a potential
Disability Discrimination Act protected disability, the safest thing is to give
notice immediately, assuming,  that is,
that there is no contractual right for the employee to have a disciplinary
hearing or other procedure implemented before notice can be given.

QWe are losing a contract and the
employees would transfer across to another employer.  However, we have vacancies in another department and the
employees want to stay with us.  Can we
do anything?


AThe Transfer Regulations operate
automatically on any employees employed in the transferred operation
immediately before the transfer. However, employees have the right to refuse to
transfer, in which case they are deemed to have resigned. 

If you
transferred them to the other job before the transfer, they would not be
covered. If still employed in the transferring part immediately before the
transfer, it is a “nice”, but in practice irrelevant, point whose service they
resign from.

In practice
if they change to the new role at the time of the transfer, you will achieve
your object.

By David
Marshland of WM Mercer’s Employment Law Consultancy

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