Brother fired or not?

maa299 · 13 February 2009 at 3:26PM

Hi - my brother works in sales (just short of 4 years now) in a job that gives basic pay plus commission (and reimbursement for expenses on top of that).

His company is Irish (Republic) and has no office in Britain (my brother works from home when he's not travelling). My brother's position has always been a UK one, and he receives his salary in sterling.

The company notice period is 3 months. On 20 January, my brother received an email saying that he'll be on commission only as of the year's second quarter if he doesn't generate business in accordance with his forecast by the end of the first quarter, i.e. no monthly salary from April onwards and no guaranteed reimbursement of expenses.

Legally speaking, has my brother been fired?

fengirl_2 · 14 February 2009 at 12:15PM

Surely he is employed under UK law which means that his employer has to negotiate changes in his contract and is required to pay the NMW? I would call the ACAS helpline.

ceridwen · 14 February 2009 at 12:25PM

Hmmmm......well...I'm sorry to hear that. To put it very simply - I would say that if an employer no longer pays you a salary - then you are no longer their employee automatically (few people work for nothing). He needs to check the law on that point.

But - at a practical level - regardless of what the law says - then I can only say what I personally would do here - ie send the company a Recorded Delivery letter (copy kept) stating that I intend to continue working under the existing terms and that if they would not accept this then I deem them to have dismissed me/made me redundant as from (the last day before the 2nd quarter). I'm just not sure whether this would be likely to count as a dismissal or a redundancy - I guess the question is a bit academic unless your brother has worked for this firm long enough to be due for redundancy money. It would be as well, however, for him to have a redundancy letter - to prove to the D.W.P. that he hadnt resigned when it comes to him making a claim for benefits.

Hopefully - someone will come along who knows what (if any) variations there are in the law in the Irish Republic.

ACAS would probably be the best bet to start with for advice.

Regarding the NMW - I see the point - but the firm could well have some new contract up their sleeve that would deem him to be self-employed (in which case - if the firm managed to convince the Inland Revenue that it really was self-employment - then I dont think NMW would apply).

I also dont like the sound of "no guaranteed reimbursement of expenses" - to me that very much has the ring of he is likely to end up paying the firm's expenses for them - ie very much out of pocket himself. No salary - AND he'd probably end up paying their expenses - he needs to get out of that job pronto at the end of this quarter - the only question is the best method for doing so.

maa299 · 14 February 2009 at 2:10PM

Thanks so much for the replies. There's one more point I should add, which may be relevant.

Although my brother's effectively employed by the company, he's actually self-employed for tax purposes. Whether or not this is tax avoidance, I'm not sure, but his boss obtained for him a second letter of income from another UK company (which is bogus - all income comes from the Irish company he works for only) from the very start and told him that this would be more tax-beneficial for both of them.

I guess this means that NMW is unfortunately out of the question, right?

More importantly though, my brother will have been working for the company for 4 years. Wouldn't he be eligible for statutory redundancy pay of £350 x 4 (my brother is 28 years old) = £1400?

Soubrette · 14 February 2009 at 2:22PM

maa299 wrote: »

Thanks so much for the replies. There's one more point I should add, which may be relevant.

Although my brother's effectively employed by the company, he's actually self-employed for tax purposes. Whether or not this is tax avoidance, I'm not sure, but his boss obtained for him a second letter of income from another UK company (which is bogus - all income comes from the Irish company he works for only) from the very start and told him that this would be more tax-beneficial for both of them.

I guess this means that NMW is unfortunately out of the question, right?

If true then it is not tax avoidance but tax evasion. (the second income stream, even if genuine, does not automatically prove self employment - loads of people have a full time and part time jobs - both jobs being PAYE employment).

If he goes to HRMC and says that he thinks he is employed and not s/e then they will pursue the company for unpaid NI contributions etc

Employers think they are very clever doing this but court cases are usually brought about by disgruntled 'employees' seeking the benefits to which they feel entitled to.

I would get legal advice from a specialist employment solicitor urgently if I were your brother.

Sou

fengirl_2 · 14 February 2009 at 4:26PM

I endorse Subrette's answer.

ceridwen · 14 February 2009 at 4:40PM

So do I - endorse Soubrette's answer that is.

Wookey · 14 February 2009 at 5:06PM

If he is self employed for purposes of tax and this company is the only one he works for and if they have been paying him for this length of time then he is not self employed. HRMC will probably pursue and he will have grounds for an industrial tribunal, ACAS should advise better.

maa299 · 14 February 2009 at 9:39PM

OK - he'll speak to ACAS next week. Only thing is that he's worried that he'll be found to be at fault for accepting this tax situation. Or is the responsibility for this the employer's?

maa299 · 15 February 2009 at 12:08PM

By the way, the P45 is with my brother's employer - rather strange, right?

maa299 · 17 February 2009 at 1:16PM

OK, well my brother's just spoken to ACAS. They don't know anything about tax, so they've advised him to contact HMRC.

My brother's worried about two things: That an employment tribunal will inevitably cost him the possibility of obtaining references from his employer in the future, and that he might be found to be partly/equally responsible for accepting his tax position as proposed by his employer.

On the second concern, if my brother's re-classified as an employee, will he have to pay backdated employee (primary) Class 1 NICs and backdated PAYE income tax, less tax and Class 4 NICs already paid as a self-employed sole trader? Or would his employer be responsible for that, along with backdated employer (secondary) Class 1 NICs?

And is any of that complicated by the fact that the employer's Irish and/or has possession of my brother's P45?

Brother fired or not?

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