Frequently Asked Questions
1. Why Jonathan Lee Recruitment?
At Jonathan Lee, our contractors are part of our team. We ensure that you get the support, advice and service you need to allow you to be able to focus your efforts and energies on making your assignment the success you want it to be. We find hundreds of assignments across a range of industry sectors, offering you flexibility and choice whether you operate a limited company or through one of our carefully vetted and fully compliant umbrella partners.
Our robust contractual documentation process clearly defines the relationships and responsibilities of all parties up and down the supply chain. We also operate a strict compliance audit process that protects all parties and meets the legal obligations and requirements of HMRC etc.
We are aware that regular, flexible and prompt payment is the highest priority when working on contract. We want you to be able to concentrate on your work safe in the knowledge that payment will arrive on time and without issue. Our friendly & professional payroll team has a 100% record on on-time payment, where all documentation is provided in line with the agreed process.
2. Should I opt in or opt out of the Conduct of Employment Agencies and Employment Businesses Regulations 2003?
We will ask you to decide whether you wish to opt in or out of the ‘Conduct Regulations’ otherwise known as ‘EAA’. These regulations were created to offer increased protection to contractors.
There are a number of implications to you and you should seek independent advice before making your decision:
If you opt out:
You will not receive the benefits outlined, however most genuinely self-employed freelance contractors want to be treated as a business for tax purposes, and find that the protection offered by the legislation is outweighed by the benefits of being classed as genuinely self-employed [see IR35].
If you opt in:
You will receive some benefits akin to those of a PAYE (Pay As You Earn) worker with added security, however this will affect the assessment of your status for tax purposes [see IR35 below].
3. What is IR35 and what are its implications for me?
IR35 is the industry name given to laws set out in the Finance Act 2000. The legislation is intended to prevent individuals from avoiding tax by ‘disguised employment’ - working as self-employed contractors through their own Limited Company even though they do the same job as an employee.
If the relationship between the worker and the client would be classed as employment if there was no intermediary (Limited Company), the IR35 rules make sure that the worker pays similar income tax and National Insurance Contributions to conventional employees.
There are several determining factors that define whether a Limited Company contractor falls in or outside of the IR35 legislation and HMRC operate a test process to help define status. The tests are specific to each assignment or piece of work and it is reasonable therefore for a contractor to be operating inside of IR35 legislation on one assignment and outside of IR35 legislation on another.
The key tests for IR35 definition are as follows;
- Direction, Supervision and Control - The degree of supervision and control exercised by the client over the services to be completed, as well as how, when, and where the individual does the work is highly important. A self-employed individual may agree to perform a particular task at a specific time and place, but it is unlikely that he will be subject to any right of control by the client. An employee on the other hand, is likely to be told where and when the tasks should be undertaken.
Mutuality of Obligation - An employer will try to make sure that his employees have a continuous supply of work and will also expect the employees to carry out the work when he requires. A self-employed (Limited Company contractor) person will do the work he is being contracted to do and will finish with no expectation of further work. When work is regularly given and accepted over a period of time, HMRC may take the view that employee status has been created by custom and habit.
Right of Substitution - A self-employed person (Limited Company contractor) enters into a contract to provide a service rather than personal skills and should be able to provide a substitute or engage help to provide the service if necessary. In contrast, an employee would provide his services personally.
Right of Dismissal - It is not normally the case that a self-employed person could be dismissed other than if he was in breach of the terms of his contract. An employee would have the right to be given statutory notice of the termination of his employment. HMRC see notice periods as being indicative of employment however reasonable notice periods are considered defendable. If a contractor is not able to terminate their contract early, or has a notice period in excess of one month, the contract is likely to fall inside IR35.
Business On Your Own Account - Other matters such as VAT registration, professional business insurances, a website, health and safety requirements, licences, advertising, etc. should be taken into account and help to demonstrate being in business on your own account. A Limited Company contractor should have all the normal trappings of a legitimate business in place.
At this point it is important to clarify that it is the contractors’ responsibility to prove their self-employed status. In most cases the contractor will seek clauses in the contract for services with the agency to confirm right of substitution, direction and control and mutuality of obligation. However, these clauses have very little significance if they are not reflected in;
a) the contract of service between the agency and the end-user
b) the actual working practices carried out during the assignment
The determination of whether an assignment is in or outside of IR35 is very much founded on a “substance over form” argument.
4. Who are your umbrella partners?
Our contractors, freelancers and interims are important to us! They are an extension of our team and representatives of the Jonathan Lee brand. It is key to us therefore, that we provide our contractors with the best support and highest levels of service possible within the parameters of the UK’s legal and compliance framework.
are approved partners of Jonathan Lee Contracts Limited only as a result of our strict and detailed due diligence checks. Our approach to due diligence incorporates credit checks for financial stability, regular audits of processes and procedures, confirmation of accreditations and memberships and a detailed investigation of financial processes, practices and standards. So we are safe in the knowledge that our contractors operate within a structured and legally compliant framework that protects our contractors, our clients and ourselves.
JSA has been operating specialist, outsourced services for recruitment agencies, freelancers, contractors and the wider self-employed market for 30 years. We are market-leading experts in the field and have seen and navigated all manner of changes in the flexible labour sector during that time. They are experts in the field, with access to a wide range of further professional specialist advisers. JSA is a founder and fully accredited member of the FCSA (Freelancer and Contractor Services Association), the most reputable trade body and rigorous enforcer of compliance and customer service standards in the contracting sector, underpinned by a wide-ranging annual audit by EY.
Danbro – www.danbro.co.uk
A firm of award winning Chartered Management Accountants, providing umbrella and limited company services to thousands of contractors and freelancers throughout the UK. Danbro offer a consultative and flexible approach to helping you understand the most suitable accounting solution for your needs. Their systems and processes integrate seamlessly with ours to ensure that invoices and payments are administered promptly and efficiently.
Formed in 1971, Champion are a leading accountancy business providing limited company and umbrella services to contractors who work in all UK industry sectors. The specialist Champion Contractors division allows freelance workers to enjoy a bespoke and friendly service that is tailored to their specific requirements. Champion understand the individual needs of their clients and will ensure that you receive the very best guidance, support and advice at all times.
5. How much will I be paid as a contractor?
When you contact us about a role, we always try to be transparent about the rate on offer from the client. There are taxation benefits to operating as a contractor whether as a limited company director or through an umbrella company, however we advise that you take independent financial advice to understand what your likely net income will be as this can vary depending on personal circumstances and how you are set up. We are fully compliant with the Agency Workers Regulations 2010 which give equal treatment rights to agency workers and came into force on 1 October 2011. Agency workers who are deemed as in-scope will have the right to equality of treatment with comparable entry-level direct recruits of the hirer in respect of certain basic working and employment conditions relating to pay, the duration of working time, night work, rest periods, rest breaks and annual leave.
6. What level of insurance do I need?
The contract, freelance and interim marketplace is a constantly evolving regulatory environment which presents ever changing risks and opportunities. At Jonathan Lee Contracts Limited we take our responsibilities for compliance, risk mitigation and the ongoing welfare of our contractors very seriously. We require contractors to have the following insurances in place;
- Professional Indemnity insurance – to a value not less than £1,000,000
- Public Liability insurance – to a value not less than £2,000,000
- Employers Liability insurance – to a value not less than £5,000,000
- Any other industry-specific insurances as required
For more information on why you need insurances at these levels, please click here
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