A lot of people want to freelance in the UK but need a work permit. This makes 'pure freelancing' impossible as a WP holder has to be the PAYE employee of the sponsoring company.
This guide is for those who are considering working for a consultancy that 'sponsors' their permit while paying them based on their billings.
At workpermit.com we have worked with several good consultancies, and have seen the debris left by rogue operators.
If you are considering such a move, feel free to drop me an e-mail and I can give feedback on any consultancy you may be considering, or suggest one if you have not got one lined up (or if the one you were considering is may be a rogue operator)
Q: Can I work on agency contracts?
A. On a WP you can not be 'bodyshopped'. This means that you must be on a project based contract. Most agency contracts are by default bodyshop contracts so you need to be very careful. A good consultancy can advise on this area
Q: What sort of deal can I expect?
A: This will depend on the contract. Some contracts involve particulary high risk or require higher than usual insurances (eg more than GBP2m PI cover). However, if you have a project based contract and can bring it to a consultancy, you should usually be able to get a margin in the 30% range (from which the employer would fund the 13.8% employer's National Insurance. AND 3% employer's pension contribution) on that project.
Q: Can anyone get a work permit this way?
A: No. Consultancies will only hire those with the skills and experience to command good rates. The average charging rate is probably GBP400/day in IT. If you can bill GBP 250+ for a 7.5hr day you should find a home, and if you are very persuasive you may find someone to support you as low as GBP200/day. More junior staff should probably not try to go into consulting.
Q: What will my relationship be with my sponsoring company?
A: They will be your employer. They have a duty to pay you your base salary until your employment ends, and to tell the Home Office if you leave them before the permit expires.
Q: What should I avoid?
A: Generally any company that seeks to be very restrictive, or which tries to make money by taking cash from you as opposed to making a profit margin on the client projects you deliver. In particular, watch out for:
1. Any form of 'bond' or up front fee
2. Punitive penalty clauses on leaving. In this respect, anything beyond requiring PARTIAL refunds for training courses / disbursed costs is probably wrong. Good practice is that 1/12th of any such costs should be written off each month, so if you stay 12 months you repay nothing, if you leave after 9 months you repay 3/12ths etc.
3. Any structure which does not give you clarity. Rogue operators can turn into outright thieves, especially when dealing with departing staff.
4. Anything short of full support for getting ILR. If they are a genuine consultancy and a decent company they will welcome ILR status as it reduces the papework on them (consultants with ILR do not need every contract to meet Home Office criteria).
5. The contract process. Any company that will sign standard agency terms is almost certainly non-compliant which exposes everyone; particulary the WP holder whose permit can be revoked if the company is found to be unsuitable (The Home Office is increasingly vigilant in this respect, and the political climate makes further clampdowns probable)