Employee Benefits as an IR5 Factor for Contractors

Employee Benefits as an IR35 Factor
Employee Benefits as an IR35 Factor

Employee Benefits

One IR35 Factor is Employee Benefits and whether the freelancer gets any of them. Contractors normally don’t get holiday pay, sick pay or pension contributions from their client company. So, this does differentiate them from an employee of the company.

The company doesn’t usually give them training courses. However, it does happen, sometimes, if the company can’t find enough contractors with a new skill. Contractors would be best not to take the course on the same terms as employees of the company. Make an offer to at least partly pay for the course.

Training Course

Taking the course itself and using it at a clients’ site will be a plus factor for taking you outside IR35. That’s as long as the client company don’t pay for you. If you don’t want to pay for it offer to do extra time to cover the time spent on doing the course. Another way is to arrange to be not paid while taking the course. That’s because they will not dock the permanent employees pay for doing the course.

You are constantly trying to differentiate your working practices from the company’s employees. This is to show that you are not a disguised employee yourself.

Christmas Parties

Some companies invite contractors to their Christmas Parties and some don’t. The mean-spirited companies with jealous permies don’t but the best companies do. You could just not go but that would make it seem that you are mean-spirited especially at Christmas Time.

However, you could offer to pay. If it is free, organise something with the rest of the contractors to pay for something, e.g a few round of drinks. Paying for the Christmas Party would not cost much and again it would differentiate you from the employees.

Sports Facilities

If the company has a sports club, gym or sports facilities you would want to use them. However, this is an employee benefit. It would be best not to use them. However, as this would not be a major factor that decides whether IR35 catches you or not you might just want to find some way of differentiating yourself from the employees by paying for your use of it.

If contractors cannot, unlike employees, become members, then that is good. The free membership is the employee benefit rather than the sports facility, That’s especially if they charge the contractor for the use of it.

Company Restaurant

If there is a company restaurant for lunchtime it would be better if you used the facility differently from employees. It would be good if their meal was subsidised and yours wasn’t. If there were two restaurants, only one of which they let contractors use, that would be good as that differentiates again.

The golden rule for Employee benefits as an IR35 Factor is don’t take or use them. If you do, make sure it is on a different basis than the permanent employees take or use them.