Is this legal?
2 replies (most recent on top)
It does reduce liabilities, and they would have to pay you anyway. So, on paper we look better if we have less liablilties.
From the accounting point of view, the positive impact is on the Balance Sheet as less liabilities boost the balance sheet. From the Profit and Loss perspective it's probably a wash.
How does that boost profit? They are still paying out your direct salary and benefits. If anything it reduces profit, less billable hours are being recorded that can be passed on to the client.