What are No Rights Employees (NREs)?
NREs are workers that operate on a zero-hours contract, are paid via payroll, taxed like permanent employees, but are not actually employees. They're something akin to contractors, but unlike contractors, they can be treated like employees, can work on "BAU" work and without a Statement of Work.
There is no need to be concerned about "control", "mutuality of obligation" or any other complex legal conditions with NREs. They can be given any sort of work at any time, and they're generally obliged to do it.
Which legislation created NREs?
The Finance Bill, 2017 created the concept of "employed for tax purposes" and "inside Off-payroll rules". These terms are a complicated way to describe the No Rights Employee.
Are NREs just for the public sector?
No! You can hire NREs if you're in the public or private sector, in any industry and for any job function. Indeed, many organisations already are, and they're getting the benefits right now!
Are NREs approved by HMRC and government?
Yes! NREs were deliberately and specifically created by the government, having been lead by HMRC. Indeed, HMRC generally prefer NREs to contractors.
The legislation was passed by a comfortable majority of MPs, so you can expect a great deal of support from those and other MPs on this subject.
Can I hire NREs right now?
Yes! NREs were created by legislation in 2017, and the first NREs were hired in the public sector shortly afterwards. NREs are not restricted to the public sector, and can be hired in any industry for any purpose.
Many organisations are already replacing contractors and permanent staff with NREs and are enjoying the benefits than come with them.
Can I convert my full time or zero hours employees to NREs?
Yes! You can convert employees to NREs in much the same way as some companies have previously converted employees to contractors. Unlike that experience, NREs are HMRC approved, so conversion will not attract tax investigations because NREs are in fact taxed in a similar manner to employees.
NREs are government and HMRC approved.
Don't I need to perform a "Status Determination" for NREs?
No! Many large employers have already "blanket" assessed many of their roles as being NRE, and they have filled those roles with workers. They have set an example and precedent.
It is true that assessments of IR35 compliance are technically required by law. However, you're free to hire NREs without a formal assessment, and if asked to provide one, you can use HMRC's CEST tool to generate one. HMRC prefer NREs to contractors, so their tool generally guides assessments towards NREs.
Further, when hiring an NRE there's no need to have an individual or carefully worded contract. By having an open-ended contract and giving an NRE some "business as usual" work to do, both CEST and HMRC will support your de-facto assessment.
Will NREs attract union attention?
No! NREs are already in use nationwide and have been legally been part of statute since 2017.
NREs are sometimes called "inside IR35 contractors" and unions generally do not support contractors. Contractor campaigners have repeatedly tried and failed to get unions involved in the NRE debate, so we can conclude hiring NREs will not attract union attention.
Will NREs save me money?
Yes! NREs have no rights to holiday or sick pay, maternity, pension or other employee benefits. Not having to pay these benefits additionally means that employers can expect greater productivity from NREs as they will generally avoid absence.
Further, NREs can be terminated with immediate effect and without reason. Thus, poor performance or changing business needs can be dealt with swiftly and without the need for complex, lengthy and expensive consultations, performance improvement programmes, written or verbal warnings, procedures or processes.
Can NREs improve my share price?
Yes! NREs directly contribute to share price because they do not count as "headcount" in official accounts filings. As such, by converting permanent staff to NREs, you can improve your "earnings per employee". This is a key factor used by investors to gauge the value of a share, and so you can expect an improvement of share price as a result.
Further, a strong share price and high "earnings per employee" will attract foreign investment and possibly take-over (especially post-Brexit). Shareholders can expect great benefits in such cases.
Will NREs have to be part of my Workplace Pension Scheme?
No! NREs are not entitled to a pension (if they want one, they have to pay into it from their take-home pay). As such, they do not attract the cost or administrative burden of the Workplace Pension scheme.
For companies with a pension scheme short-fall, NREs may be able to help. They can keep the general productivity of the company up, whist not adding to the costs of the pension scheme. As such, as the company makes profit it can close the existing short-fall without increasing it with new headcount.
Do NREs have to be paid Minimum Wage (or Living Wage)?
It depends. If you hire your NREs on a hourly basis, then you (probably) have to pay minimum wage. However, if you hire your NREs on a performance basis (eg. number of tasks performed), then you don't strictly have to adhere to minimum wage rules. This area is complex and you should seek specialist advice if it is of interest.
What if an NRE leaves during a critical piece of work?
NREs can of course leave your employment. This can be mitigated with asymmetric notice periods written into their contracts (eg. two weeks for them, immediate for employer).
NREs can indeed be covered by Non-Disclosure Agreements (NDA), non-compete clauses and other appropriate restrictions. These are no more or less enforceable than with employees, although you should take specialist advice if considering this option.
Do I have to invite NREs to Christmas Parties and other Company Social Events?
No! NREs are not entitled to any employee benefits, so you can keep social events and other perks exclusively for employees, top management etc.
Do NREs have to work through Umbrella Companies?
No! NREs are on your own payroll, and so no umbrella companies are required. This benefits employers in two ways. Firstly, the costs of the umbrella service do not reduce the workers net income, so employers do not need to raise rates to compensate. Secondly, some umbrella companies are unscrupulous and, whilst not yet regulated by the government, are sure to attract negative attention in the future (along with potential publicity issues for employers).
Just for clarity, if you hire workers through an umbrella company, you are essentially using an agency. Using agency workers has historically been a useful way to keep rates low whilst maintaining flexibility. However, NREs make agencies and umbrellas unnecessary.
Is this site trying to sell me something?
No! We're just here to promote the use of NREs because we believe this is our chance to increase the productivity and fortunes of Great Britain, especially post-Brexit.