19 Feb 2020
Deutsche Bank is facing the potential departure of dozens of contractors working for a London-based compliance team after the bank demanded that its freelance workers take a 25-percent pay cut in response to UK tax reforms, the Financial Times reported Sunday.
The bank revised its hiring policy on freelancers in anticipation of new UK tax rules that are intended to crack down on so-called “disguised employment” of contractors who use limited companies to invoice their services. Under the UK rules, midsize and large companies will be responsible for assessing the employment status of such contractors and could be held liable for unpaid income tax and national insurance obligations if the workers are misclassified as self-employed.
Beginning in late March, the German lender will only work with freelancers who agree to join the payroll of the recruitment outsourcing firm Resource Solutions—a step that will result in an approximate 25-percent drop in take-home pay for the workers, according to the FT.
The decision has prompted as many as 50 out of 53 contractors in the bank’s London-based “change-management” group to consider leaving by the end of next month, two individuals with knowledge of the matter told the FT. The team, which was established five years ago, is tasked with monitoring Deutsche Bank’s global compliance with anti-money laundering and financial crime regulations, the newspaper said.
“People are willing to walk and there will be a massive impact” on ongoing projects, one of the individuals told the Financial Times. “Huge swaths of work will be mothballed.”
“If I accept Deutsche’s terms, I can’t just turn round to my mortgage lender and say, ‘can you drop my mortgage?’ I’m not even including all the other bills I’ve got,” an unnamed contractor said in the report.
A bank spokesman told the FT that the institution was “working closely with the individuals concerned to ensure that their compensation remains equitable and fair.”
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