Zero Hours Contract

jow774

I have been offered a couple of hours work each week by an accountancy firm. I was hoping to do this as self employed via invoice. They contacted me yesterday to say that they werent happy about me being self employed and that hmrc would not like it???? so they would like me to work on a zero hours contract. I already work part time on paye, so it seems to me that it would be more complicated to get a second tax code to cover a zero hours contract. I was wondering if anyone else has either come across zero hours contracts or are in similar circumstances and how they work it out?

Thanks

payrollpro

Employers use zero hours contracts to get round the requirement in the employment rights act to specify the hours of work. These used to be called the "as and when" people but the 1996 act made it impossible to sustain that kind of wording. Its possible they think they can avoid some of the responsibilities of an employer by having zero hours, but not so.

It means you are an employee and the right to be treated as an employee, have the right to paid annual holidays (working time regulations), right to notice to determine the contract, access to employee facilities, including pension scheme, etc, etc. What you dont have is an obligation to be offered work and the consequent obligation to accept it. You work as and when it is required.

To start with you will have to suffer tax deductions at BR, that is a straight 20% on all payment, until HMRC sort out the situation. What they often do is split the personal allowance between the employments in order to make sure you pay the correct amount by the end of each tax year.

In complete contrast to their view I cannot see HMRC being that bothered with a self employed arrangement, it is quite common in such circumstances. As long as you are registered S/E and create a business like appearance to your behaviour then the only problem might come from having too long term a relationship and as a consequence getting too close.

Monsoon

We employ part time staff on zero hours contracts. This worked really well as we began being an employer, as we didn't have a clue how much workload we were going to be able to delegate. As it happens, our bookkeeper, who started on a handful of hours a week 18 months ago now does typically 20. It's meant that when we are quiet, we don't have to cover wages and also if she wants time off then she's not obligated to do any hours. It's worked really well for both of us. In terms of employment status she's definitely an employee and not self employed. This does sound different to the set up you are going into though.

Employees are afforded the same rights as any other employees under a zero hour contract, it just adds extra flexibility. Remember you will accrue holiday pay, which may be a plus point!

To be honest, as you are a MIP and thus have your own business, I wouldn't have a problem with taking on someone like you as a self employed subcontractor (and indeed do). It's possibly cheaper for the company to employ on an ad hoc hourly rate than to pay your self employed rates, so maybe that's partly it too.

In terms of tax code, it's no major hassle apart from it affecting your personal cash flow a bit.

jow774

Thanks for your replies.

Im still only exempt though Monsoon on the business front sadly! I need to kick myself into gear on advertising I think, as I work part time already Im a bit lazy with promotion (and everything else, lol). I hoped that this would be the push I needed to step into becoming a full mip, but as it looks like they favour the zero hours contract its another step away from working for myself sadly.