How Much Independence Do I Get with an IT Contract?
Exploring Your Rights as a Contractor
IR35 legislation has received a lot of publicity recently, much of it negative. It’s unsurprising, of course, given how flawed the ruling seems to appear. However, despite the negativity, there have been one or two positive things to come from IR35, such as helping contractors to understand more about the definition of contracting, about the role of the contractor, and about rights for independent contractors.
Having said that, due to the many complexities surrounding IR35, HMRC’s CEST tool, and employment status, many contractors still aren’t 100% sure on where they stand, especially when it comes to how much independence and flexibility they get with their contract. So here, we'll attempt to clear up any confusion.
Exploring: Contractual Independence
Under IR35 ruling, a big difference between a PAYE employee and a contractor is the level of supervision received. While an employee will typically be heavily supervised within their role, contractors are generally given a little more independence. This is because a contractor will be working on a specific project (perhaps even a specific task) rather than contributing to day-to-day business operations.
Exploring: Working Independence
Once a fixed term contract has come to an end, or once the project has been completed, contractors will have complete independence when it comes to what to do next. In some situations, a contractor may be able to renew their contract with the same company, or they may wish to search for a new contract. Alternatively, a contractor may decide to take some time off; anywhere from a few days to years!
Exploring: Working Hour Independence
There will usually be a little less independence when it comes to working hours. While part-time contracts do exist, they are relatively rare when compared to full-time contracts. The exception to this is fixed fee contracts, which will often mean that the contractor can choose their own hours and work independently, as long as project milestones are met and all work is delivered by an agreed date.
Exploring: Financial Independence
As an independent contractor working under a limited company, you will retain full financial independence, which means you will retain responsibility for paying the correct amount of tax and National Insurance contributions. Things are different, however, if you work for an agency or under an umbrella company. In this scenario, you will be considered a PAYE employee by the agency.
In many cases, a contractor looking for work will be very clear on the level of independence they’re looking for: a 3-day working week, for example, or a short-term contract. The problem, however, is that they may find it challenging to get exactly what they’re looking for out of their next contract.