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Businesses with contractors

Should they do this

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a SME has 5 contractors who are seld employed.  He wants them to continue working at a reduced rate that takes into account the grant they will get so that hopefully as he puts it they are in the same position. Therfore the business will be paying them a lot less. I have reminded him that either he lets them go (they are one month rolling contracts)  and then reengages them on different terms or he pays them the current rate for the job irrespective of the government grant which is nothing to do with him , he sees it al differently as he is concerned that the business will run out of cash in 6 months so is obviously looking ofor ways to save money. what do others think . Nick

 

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Psycho
By Wilson Philips
31st Mar 2020 19:25

I think it is a matter for the parties to agree upon and nothing to do with you.

Using round numbers, if the contractor is currently getting £2,600 per month, and the grant is restricted to £2,500, he might not be minded to work just as hard for an extra £100. But if he’s currently getting £6k a month, with no prospect of other work, his mindset might be a little different. And then there’s consideration of whether he wants to have a working relationship after we come out of this.

As I say, though, it’s for them to work it out.

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By paul.benny
01st Apr 2020 08:37

We will all have to take pain in this crisis - reduced income, bad debts, etc.

The greedy will seek to minimise their own losses, regardless of the cost to others; some will just focus on survival; others will seek to do the right thing by their workers, their clients/customers, their suppliers.

As Wilson Philips says, its for the parties to work out. Those who dump on others will doubtless pay a reputational price later - whether with staff or customers.

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By meadowsaw227
01st Apr 2020 10:04

Unless the SME has had to reduce his prices why would he expect his sub contractors to reduce theirs ? .

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By tom123
01st Apr 2020 10:07

If he means furloughing - he is asking his subcontractors to be complicit in fraud. They cannot claim if they have been working.

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Replying to tom123:
By Duggimon
01st Apr 2020 10:11

They're self employed Tom, I think carnmores is referring to the grant the self employed will receive in June, which if they reduce their work and income, entitles them to up to £7,500 for April - June.

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Replying to Duggimon:
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By tom123
01st Apr 2020 10:37

Trust me to not read the exam question properly

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By Duggimon
01st Apr 2020 10:09

As they're all self employed, your client isn't bound by the same rules as employers, they're free to negotiate whatever terms will allow for them to keep working, him to keep paying and everyone to come through this.

It's not clear if your "should" is asking about a legal, contractual, or moral issue in the proposed plan but I'm not sure there are any issues with it in principle, unless there are contracts in place precluding a change in the level of fees.

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