Unpaid Employee - Possible?

Discussion in 'Growing and Managing a Business' started by Bennage, Dec 5, 2011.

  1. Bennage

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    Dec 5, 2011
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    Hi all,
    First post, so be gentle...

    I'm trying to put together some employment contracts for a new company I'm involved with. Here's the story so far...

    A group of us have been offering our services to 3rd parties for a while now on an entirely voluntary basis, however we are aware that there is an opportunity to maybe make some money out of what we offer. With that in mind, we created a company...

    The company has been registered as a Private Limited Company.

    The company is registered @ Companies House with three directors (me and two others).

    We have a total of 8 shareholders (including the 3 directors).

    The business involves the use of certain things which require Police accreditation. One of the requirements of this is that those seeking accreditation need to be 'employees' of the company.

    We would like very much to be able to make use of these things we gain from the police on our voluntary operations, however by doing so, the individuals then need to be acting as employees, not volunteers.

    With that in mind, is it at all possible to create maybe 'casual worker' contracts to the other 5 shareholders/workers and have them work for minimum wage on paper but in reality not claim for any money on a time sheet or something?

    The other issue is that there may well be jobs which would result in the workers being paid a lot more than minimum wage. How would I set it up so that they could also be paid more on a job?

    Any advice on the above would be amazing as I'm really rather stumped on the whole thing.

    I know I've been a bit vague and probably haven't given enough info, so any questions you have, please ask away!

    BIG thanks in advance,

  2. ArcSine

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    Jun 2, 2010
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    Start with the document in which "employee" is specifically defined for this purpose. In most cases like this (if the party who drafted these requirements was sharp enough) you'll be given a careful definition of "employee". It might be delineated in terms of minimum monthly compensation, minimum average weekly hours, or other parameters. You can't really come up with a plan to clear the hurdle until you know precisely what the hurdle is.

    Beyond that, one very general idea is that 'compensation' doesn't necessary mean immediate, cash compensation. If an individual must make X euros or pounds in order to be an "employee" for some given regulation, it's likely that deferred compensation of some form would suffice (either explicitly, or implicitly because the drafter of the requirements didn't think to specify "cash" compensation).

    So depending on how those requirements read, you might be able to employ some form of a deferred comp arrangement to clear the hurdle. Caveat: With this approach, though, it'd certainly be wise to have your accountant check the arrangement very carefully to ascertain what, if any, implications such arrangement might have with respect to payroll tax, insurance, liability, and so on.

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