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FAO Buildersmate or Themas
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Hi, Barmaid suggested that I asked you both for advise regarding Employment law.
The company that I work for was made into an LLP about 4 years ago, but this year the boss has suggested that quite a few of the employees become non-equity, non-voting members of the LLP.
He has made out that the significant benefits for the present employees are that we will pay less NI so we will be better off.
However there are downsides, ie no employee security, such as redundancy, SSP, plus other things.
The company I work for is very small and not union represented, so I am unsure who I can turn to for "proper" employment law advise.
My main concern is that I would no longer be protected by employment law and I am single with my own house and bills to look after.
For the record the company is in not in financial trouble (as far as I am aware), in the face of recession we have just had our best year to date (est 1994)
I guess I am asking what are the major cons to the proposal as I doubt he is giving us the full details.
All information gratefully received :)
The company that I work for was made into an LLP about 4 years ago, but this year the boss has suggested that quite a few of the employees become non-equity, non-voting members of the LLP.
He has made out that the significant benefits for the present employees are that we will pay less NI so we will be better off.
However there are downsides, ie no employee security, such as redundancy, SSP, plus other things.
The company I work for is very small and not union represented, so I am unsure who I can turn to for "proper" employment law advise.
My main concern is that I would no longer be protected by employment law and I am single with my own house and bills to look after.
For the record the company is in not in financial trouble (as far as I am aware), in the face of recession we have just had our best year to date (est 1994)
I guess I am asking what are the major cons to the proposal as I doubt he is giving us the full details.
All information gratefully received :)
Answers
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It is fortunate I happened to spot this question - I have dropped out of answering on AnswerBank - there's too much trivia and simply not enough decent questions (of this quality) any more to interest me.
The implication of this is that HMRC regard you as self-
The implication of this is that HMRC regard you as self-
06:48 Fri 06th Jul 2012
It is fortunate I happened to spot this question - I have dropped out of answering on AnswerBank - there's too much trivia and simply not enough decent questions (of this quality) any more to interest me.
The implication of this is that HMRC regard you as self-employed. Have you looked at this page of HMRC?
http://www.hmrc.gov.uk/sa/parts-partners.htm
The financial implication of that is that you have to pay Class 4 NI contributions on your income. This is because your employer will no longer be having to pay the 13.8% flat rate employer's NI contribution on your earnings. What uplift in your earnings does the LLP propose to make to your income to allow for this? - indeed has the LLP even acknowledged to you the impact of this change?
Now have a look at this page.
http://
This particular article (from a firm of accountants) is arguing that HMRC may in future 'change the rules' about self-employed status of non-equity partners - because there is no risk v. reward element of capital injected by such people.
But read on further down - regarding the legal side the position is even more complicated as to whether (as a non-equity partner) you would continue to be covered by the main tenets of employment law legislation. I am aware of several legal cases (in this article quotes some) whereby an Employment Tribunal has decided that a partner in an LLP is covered for such aspects such as unfair dismissal claims. So I cannot say what aspects of employment rights you might lose.
What I would say is two things:
1) If an employer is determined to part with an employee, it will do so - especially in an organisation with predominently managerial / professional people - it boils down to how much money the organisation forks out to gain the agreement of the employee being released.
2) There has to be a level of trust in the organisation by the workforce - especially of the type you are in, that they will do the right thing by the staff. It doesn't sound like you have much trust in the motives of the senior partner(s).
If this was being done to me (and I have experience in working for a few professional services companies, which is what I suspect yours is), I would want considerable financial carrot to do it - not such a quid pro quo based on a change in NI contributions.
If you want to follow up with further questions, I will endeavour to respond, but this will be my last.
The implication of this is that HMRC regard you as self-employed. Have you looked at this page of HMRC?
http://www.hmrc.gov.uk/sa/parts-partners.htm
The financial implication of that is that you have to pay Class 4 NI contributions on your income. This is because your employer will no longer be having to pay the 13.8% flat rate employer's NI contribution on your earnings. What uplift in your earnings does the LLP propose to make to your income to allow for this? - indeed has the LLP even acknowledged to you the impact of this change?
Now have a look at this page.
http://
This particular article (from a firm of accountants) is arguing that HMRC may in future 'change the rules' about self-employed status of non-equity partners - because there is no risk v. reward element of capital injected by such people.
But read on further down - regarding the legal side the position is even more complicated as to whether (as a non-equity partner) you would continue to be covered by the main tenets of employment law legislation. I am aware of several legal cases (in this article quotes some) whereby an Employment Tribunal has decided that a partner in an LLP is covered for such aspects such as unfair dismissal claims. So I cannot say what aspects of employment rights you might lose.
What I would say is two things:
1) If an employer is determined to part with an employee, it will do so - especially in an organisation with predominently managerial / professional people - it boils down to how much money the organisation forks out to gain the agreement of the employee being released.
2) There has to be a level of trust in the organisation by the workforce - especially of the type you are in, that they will do the right thing by the staff. It doesn't sound like you have much trust in the motives of the senior partner(s).
If this was being done to me (and I have experience in working for a few professional services companies, which is what I suspect yours is), I would want considerable financial carrot to do it - not such a quid pro quo based on a change in NI contributions.
If you want to follow up with further questions, I will endeavour to respond, but this will be my last.
bm
So do I! There is no way I could answer this question the way you have. You hinted at the main point which came to my mind while reading it - What's in it for them (i.e. the senior partners)? They must get some advantage from it, otherwise why should they bother to suggest it?
My own inclination would be to be very very cautious, to get together with the other employees who might be affected & try to present a united front against the change unless a really worthwhile package of improvements is offered which you judge adequate to counter the actual & potential disadvantages.
So do I! There is no way I could answer this question the way you have. You hinted at the main point which came to my mind while reading it - What's in it for them (i.e. the senior partners)? They must get some advantage from it, otherwise why should they bother to suggest it?
My own inclination would be to be very very cautious, to get together with the other employees who might be affected & try to present a united front against the change unless a really worthwhile package of improvements is offered which you judge adequate to counter the actual & potential disadvantages.
BM, thank you for your answer, it will be helpful to 8 people who I work with that are affected by this proposal. I will check the links you have given and hope they help us all.
I dont come on here very much, but was guided by Craft 1948 to ask for help as she really appreciates the genuine folk and the help that comes from it all.
Much appreciated, thank you :)
I hope you can see from the other responses that you are appreciated too
I dont come on here very much, but was guided by Craft 1948 to ask for help as she really appreciates the genuine folk and the help that comes from it all.
Much appreciated, thank you :)
I hope you can see from the other responses that you are appreciated too
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