A Tale of Two Contracts

Legal Eagle

Contracts

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Fergal:

Fergal is an IT professional with in-demand technical skills; he agreed to tell me about his industry. He spoke to me about `contractors` who are deployed in the IT industry with a contract of employment. The IT industry has for many years recruited `contractors` and they are not entitled to sick pay, paid holiday or pension. However, they enjoy a lot of flexibility and secure excellent wages.

Fergal (who has never worked as a `contractor`) told me `contractors` typically spend between one month and several years working on projects. The number of hours worked is usually in line with permanent staff around 37 hours per week but overtime pay is common.

I asked Fergal about the wage a `contractor` can secure:

A `contractor` undertaking the type of work I carry out (in my permanent role) might expect a daily rate of £350-£500 per day. But some could earn in excess of £1K a day. This would typically be London based and only if the `contractor` has very high in-demand skills, a `contractor` with comparable skills to myself could make excellent money though rates have declined in recent years. 

Fergal who is highly informed and educated was asked to reflect on the wider implications of casual work:

The trouble is at the top end of the market ‘casual’ work contracts are called ‘consultancy’ and ‘freelancing’ and can have quite big rewards whilst at the other end it’s kind of exploitative when applied in the context of low paid workers…. Most IT freelances work through their own `personal services` companies which offer tax advantages.

Fergal and Legal Eagle support the recently launched HMRC campaign focusing on self employed operators to pay tax as the website Shout 99 Jobs Boards points out:

HMRC has launched a number of high-profile targeted clampdowns on tax dodgers in specific sectors, including plumbers, central heating engineers, online traders, offshore investors, tutors, medical professionals and VAT defaulters. The campaigns follow similar lines of a time-specific ‘warning’ to put your tax affairs in order by certain date….or face the consequences.

Shout 99 also carries advertisement to help “Freelancers Outside” IR35 (FO35).

Patrick:

Patrick is a Further Education Lecturer having previously taught in a large College on a `term-time` only contract. He told me that he was paid about £15 x I hr, although these hours altered and changed during his tenure but he tended to teach about 18 to 26 hours a week. Patrick had an entitlement to sick pay and his tax and other deductions were taken directly by his employer. The College effectively treated him as a full time staff member, except when it came to the allocation of hours and holiday pay. His situation differed from that of O.5 or 0.7 lecturers whose working hours are agreed as part of the terms of the contract.  Patrick taught the equivalent of a full time staff member but he only earned money when he taught and his hours of work fluctuated.  All his lesson plans, schemes of work, marking and report writing were conducted without pay, this applied to his administrative duties which were excessive. He also attended open nights and parent`s night and countless meeting for which he received no pay. Lecturer`s work in excess of their required hours a full time staff member is at least paid for a full weeks work.  All staff development and training undertaken during Patrick`s tenure in post (requiring him to remain on campus) resulted in no pay. An academic year runs for 36 weeks of the year, for the rest of the time Patrick told me he went without pay. The Benefits Agency considered him employed so he never claimed nor was he entitled to any benefits (his tenure predated working tax credits).

I asked him how he managed:

All the holidays were tough financially but the summer break truly difficult. I was supported by my family and lived off my slim savings.  

I asked Patrick was there anything good about his contractual status:

Well, I did get a great deal of experience and it helped me secure a job but it was a long haul and not easy, also you were treated badly. I remember my line manger informing me in early September that some of my promised hours for that year would be reduced (by about 5 hours) a  full time staff member was down on hours. The staff member had no background in my academic area and I was expected go the loss of pay and also effectively required to facilitate their work. Having to guide someone through a syllabus and propping them up with resources and materials etc is time consuming. This was the last straw and I was about to resign when the College relented. I got the hours back but I left soon after.

Wages were another bone of contention. I had to do weekly time sheet`s which inevitably got lost. At the end of the month I often went through a degrading ritual of having to negotiate with the personnel department for wages that I had worked for – it was pretty exhausting actually.

The union did their best for me – guess it was my fault for accepting a post on such lousy terms.   Also, if you worked overtime it was difficult to record and obtaining the pay not easy.  

So, it seems some contracts are good, some bad but Legal Eagle believes that `zero-hours` contracts are ugly. Remember, any pre-employment promises made without a contract of employment remain legally unenforceable, the entitlement to sick pay and the right to strike are human rights.

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