Contractor converted to FTE - Redundancy

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Scouser

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Person has been working the same job for the same company for 8 years, 4 years contracting and 4 years as an employee. If made redundant has the employee any recourse in asking for the 8 years total to be taken into account for redundancy calculation?
 
Yes, I think that they would have a very good argument that their start date was the date they began contracting assuming that they were contracting exclusively for the employer and not working for any other clients.

Brendan
 
This is common in some large multinationals...I once worked at a MNC that was being acquired and all former service for any of the group companies as contractor or FTE was considered for redundancy service.
 
The redundancy program by large corporations has been turned into a negotiation process now. Your starting position should be 8 years at x weeks per year. Whoever blinks first after that wins imho. This was my last experience and was the same for some friends in most other companies. The bottom line is they are anxious to get you to sign an ex-gratia so use that power without going too unreasonable.
 
As you were a service provider (contractor) for 4 years, where they gave you no benefits and did not do your payroll, pay PRSI and so on.. and an employee for 4, they should only classify you as an employee for 4 years.

Your start date in your employment contract probably makes this clear, unless the start date in your employment contract says you started 8 years ago as they may have considered continuous service which I doubt.

You could negotiate a redundancy amount but the company would be well well within their rights to say that you were an employee for only the 4 years.
 
boundlesshq.com

Independent Contracting in Ireland | Boundless EOR

A guide to independent contracting, including contract length, definitions, and penalties for misclassification in Ireland.
boundlesshq.com boundlesshq.com


In general, people on fixed-term contracts have the same rights as employees. They qualify for a redundancy payment if continuously contracting for two years, and they are also covered under unfair dismissal if they have one year of continuous service. A fixed-term worker cannot be treated less favourably than a permanent employee.
 
Scouser said:
Person has been working the same job for the same company for 8 years, 4 years contracting and 4 years as an employee. If made redundant has the employee any recourse in asking for the 8 years total to be taken into account for redundancy calculation?
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Was the person contracting working as a Proprietary Director of a Ltd company they owned, or via an Umbrella company or as a sole trader?

Also, as an employee, is the person a trade union member?
 
Brendan Burgess said:
boundlesshq.com

Independent Contracting in Ireland | Boundless EOR

A guide to independent contracting, including contract length, definitions, and penalties for misclassification in Ireland.
boundlesshq.com boundlesshq.com


In general, people on fixed-term contracts have the same rights as employees. They qualify for a redundancy payment if continuously contracting for two years, and they are also covered under unfair dismissal if they have one year of continuous service. A fixed-term worker cannot be treated less favourably than a permanent employee.
Click to expand...
The reference to fixed term workers in your link, is referring to employees on fixed term contracts (as opposed to employees with permanent contracts or contract of indefinite duration). I can understand your confusion though Brendan, as it's a very poorly laid out and worded page. It looks like it wasn't written by someone entirely conversant with the vernacular of Irish employment law, otherwise the language wouldn't be so loose.

The longstanding fundamental remains unchanged, that a person is either working under a contract for services (self employed individual in business on their own account), or is an employee under a contract of service.

The potential cost (via employer's PRSI, holiday, sick and redundancy entitlements) means that businesses are extremely averse to accidentally taking on employees. Thus a third possibility has become commonplace in the last 20-odd years, of a layer being created, by the insertion of another corporate entity (be it a personal services company owned by the individual worker, or an umbrella company / managed services company administered by the likes of Contracting Plus).

In substance all that this does is facilitate arrangements being made that mean the party looking to acquire labour / skills / expertise (on terms which would be categorised as an employment / contract of service if the individual was engaged directly), to obtain the services they need without having to take on employees.

By inserting another entity, e.g. Mandelbrot Limited, into the arrangements, they can contract with that company to provide them with the professional services of Mr Mandelbrot in such a way that the only employment relationship is between Mr Mandelbrot and his company Mandelbrot Limited. The end user of Mr Mandelbrot's services simply pay his company the agreed hourly invoiced rate, and most of the various risks / responsibilities as an employer fall on his company. This structure also offers some benefits from the individual's perspective, such as favourable pension planning options.

All of the above is simply a preamble to my main point here, which is that any legal / constructive obligation to pay redundancy can only run from when an individual had an employee/employer relationship with the company terminating them. The whole purpose of the contracting arrangements I've described above is specifically to protect the MNC's and other large employers from such exposure. The hourly rates paid to contractors (via their intermediary entity) are higher than the hourly rate of an equivalent employee for this reason.

In the OP's case here, if they'd been cut loose during, or at the end of the 4-year period as a contractor, there'd be no question that they would have any redundancy entitlements - that's the nature of working as a contractor, and they will have received a higher hourly rate as a trade off for lack of security of tenure.

The fact that they then took on a role as an employee for 4 years, can't somehow retrospectively confer any legal or contractual entitlement to redundancy (unless explicitly included voluntarily in their contract, which would seem daft in the context). The logical (and legal) consequence of the OP successfully arguing this point, would be that their contracting arrangement for the first four years were in fact a sham, and a whole mess of tax and PRSI issues would necessarily follow.
 
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Guys

I am not an employment lawyer.

But from looking at this some years ago, taking on a self-employed contractor who was in reality an employee was very risky for companies, and did not excuse them from employment law obligations.

Brendan
 
Brendan Burgess said:
...taking on a self-employed contractor who was in reality an employee was very risky for companies, and did not excuse them from employment law obligations.
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Agreed, 100%, hence the emergence of "contracting".

And although we won't know for sure until the OP comes back and confirms the form his "contractor" relationship took, this very well known riskiness means that it is vanishingly unlikely that we are dealing with a four year long pseudo self-employment.

I have spent no small amount of time in the last ten years vigilant for those types of arrangements, and in my experience all employers of any scale are so wise to the risk that it's become rarer than a cavity on the tooth of a hen born on 29th February!
 
Brendan Burgess said:
Guys

I am not an employment lawyer.

But from looking at this some years ago, taking on a self-employed contractor who was in reality an employee was very risky for companies, and did not excuse them from employment law obligations.

Brendan
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In the UK this is more closely defined because of IR35. It is relatively common for a contractor to he found as a disguised employee from a tax perspective, but this never confers employment rights. Typically this occurs where the contractor is working for a client via a Ltd Co that the contractor owns.

It is less well defined in Ireland. I think proving disguised employment from an employment rights perspective is unlikely. But there is a lot we don't know. It would probably be somewhat easier in certain roles and sectors. A bricklayer or driver is more likely to have a case than an IT worker in my view.
 
Whether or not it is a legal requirement, some employers will consider the contracting service for redundancy. In my case I was working via an employment agency on a hourly rate and then moved to permanent employee in the same role. Albeit at a very low wage so perhaps it was peanuts to them! Most co just want the signed waiver, especially the US mncs.
 
Thanks for the replies. Just to clarify, when I say contractor, I was an employee of my own Ltd company, earning a day rate up until I became an FTE doing the same job.

I know the company don’t owe me any more than statutory, but I had heard of it being offered elsewhere, which has been confirmed above.
 
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