Joint Employment or Self Employed?

Foxski

I'm in an interesting position regarding employment at the moment and could really use some feedback on what you knowledgeable folk would consider! Sorry it's a bit of an essay but I really want to consider all the options and I'm not too sure of the implications of different choices. I am currently employed full time as an engineer with an IT services company who's future is looking a little shaky. For this reason (& the necessity for a pay increase!) I am looking for alternative employment. I also currently work evenings and weekends as a self employed consultant for residential & businesses customers but it is on a minor ad-hoc basis.

I have approached my previous employer who is currently expanding and looking for a new IT service provider (they currently outsource) and having proposed that they employ me full time, giving them round the clock IT support at a comparitively low cost they seem very interested, although they do have a minor concern that after 12 months of intensive IT redevelopment there may not be enough work to keep me full time.

During these negotiations a mutual aquaintance has mentioned to this potential employer that he is also looking for an IT engineer in the Midlands to work part time for his IT consultancy business and having subcontracted work to me before would very much like to consider a joint venture with them, and this has peaked their interest so a joint employment proposal is now on the cards, complicating things somewhat!

Basically I see my options as the following:

1. Continue pushing down the initial path of a full time position with my previous employer, which could potentially end after 12 months but would provide steady employment in the meantime, with people I've worked with for years.
2. Take the opportunity to turn my self employed business into a full-time venture and take on both potential employers as customers on a contract basis.
3. Work with both employers on a suggested 'joint employment' scheme where each business has me for x number of days a week & they each pay half of my salary.

I understand that there are differing tax implications between working 2 part-time positions and going self employed and would really just appreciate anyone's feedback on my choices, and what my primary concerns should be whilst I discuss the options with the parties in question.

The idea of having 2 part time jobs makes me uneasy compared to a full time post, however it does give the best flexibility and learning opportunities to counter the added complexity. Going self employed is something I've considered for a while but now the potential of these two large contracts makes this a very feasible option, but it would have obvious tax and NI implications as well as making credit & mortgage applications much more difficult.

Any feedback would be very much appreciated!

PlutoinCapricorn

I am not sure that anyone can add much to this, you have thought it through yourself.

It often helps to list each option with the associated requirements, advantages and disadvantages, then to go through each option until some seem less attractive and others more. Getting your priorities sorted out is another: the freedom of being your own boss versus sick pay and holiday pay for example. So much depends on your personal situation and committments: family, mortgage etc.

If you know the potential employers, it is certainly worth getting their views about which option they prefer. As a self employed person, all my work comes from colleagues and former colleagues. However, you need to be very careful here: many employers would prefer to take on people who are self employed, as it keeps costs down. If HMRC see what looks like a regular committment, where someone regularly gets the same amount each month, they may consider the person to be effectively an employee and fine the employer.

Having two part time jobs is an interesting option, I have done that myself. You may pay less National Insurance that way, but you would need to deicde which job takes your Personal Allowance into account. You pay income tax on total income, so you still pay the same amount of tax as you would for one job. The main problem here is that you could find yourself having to fit 10 days work into 5 days. You get "double trouble" sometimes, but it is good to be able to switch between workplaces and there are more opportunities to learn new things. Are the two possible workplaces close together?

If you became fully self employed, you could charge a higher rate, offset expenses against your income and pay tax twice per year. Not paying Class 1 NI might affect your pension and benefits in the future. How is your health? Being an employee is an advantage if you are ill or injured.

Foxski

Thanks very much for the swift response! You've given me a few more things to consider for each option which is exactly what I was after. Whilst I haven't had a sick day in over 2 years the exposure there does worry me a little, particularly if flu does hit hard this winter. (Mind you SSP would barely cover a single bill as it is!).

One job would involve travel to customer sites while the other is in a fixed workplace, but it does have the potential for serious customer problems to overrun into the next day which could obviously cause overlap problems between the two. The next step is to sit down with them both and have a thorough chat about how they see it woking exactly and which they would prefer.

Any other ideas people can suggest that I consider, and/or questions to ask the potential employers next week would be much appreciated also.

Many Thanks!

PlutoinCapricorn

It is very useful for you that you already do a bit of ad hoc freelance work. I guess that you must already be familiar with self assessment returns, expenses that can be claimed etc. so the mechanisms are already in place. I have no personal experience of this, but apparently a time comes when sole traders would pay less tax if they created a limited company and paid themselves a salary. I know that IT work can be well paid, and if you did most of your work as a self employed person, you might earn enough to make creating a company the best option. Do you want to go that route?

I have found that a combination of paid employment for the regular work and self employment for anything else that might come up works very well. A lot depends on your attitute to earnings: are you keen to take on as much work as you can get even though it may make you tired and cut into your free time? Self employment is the best option here.

If you are an employee, you get paid for, say, 35 hours per week. Being fast and efficient does not benefit you as if you finish a job early, they will find something else to fill the time that they are paying you for. If you are self employed, you can capitalise on being fast as you can fit more work in thus earning more.

There are also 'retainers' that companies can pay to ensure that you will make time for them if they need you.