Contract renewal question

[ChimpMaster]

So I am being offered a contract renewal with a rate cut - ho hum - but I'm long-in-the-tooth there and can handle that, so that's not the issue. There are, however, some changes being placed in the contract that I want to run by you guys.

I am direct to the client. I'm using the PCG / IPSE contract. The client's over-zealous (new) legal team wants to add these clauses:

1. Requesting the services of a named "Individual" in the Master Agreement. There are plenty of existing clauses in the IPSE template to counter employee/employer relationships, but still, I don't like the fact that I will be named as the one person the client is requesting to provide the services.

2. The requirement that I must own all of the shares of my company. This is an odd one. Why would they care if my company shares are 50/50 with my wife?

Are either of these points a concern when it comes to IR35?

[jamesbrown]

Yeah, sure, I mean personal service is a distinguishing factor of employment, so a contract that demands personal service is inevitably not good.

But don't ask here. Ask a professional reviewer to look at the changes (they don't really need to look at the IPSE contract, because that's the point of the contract, but the contract only holds water when it isn't messed with).

Second thing sounds like a legal/compliance issue. It is not common, but also not unheard of, for agencies to request sole directorship, for example (I know you're direct).

[mudskipper]

I had the same recently using the IPSE template.

Mine was a 'side letter' that their lawyer had come up with pushing liability onto me, confirming that I owned 100% of shares and some other guff that I wasn't going to sign. They also wanted to name me on the contract.

I pushed back and got the amendments removed, but my client is very small so it was probably easier. I did ask why my share structure was relevant, but never got an answer apart from "our lawyer suggested it". But perhaps it's becoming a thing.

[northernladuk]

The first one is really bad. You could easily argue it becomes an agreement to take you on so doesn't look like a business at all. I do believe it makes a mess of your substitution clause for the same reason. If they want to contract you as a named individual how can you substitute without being in breach. It also gives the impression they won't accept one either.

Second one is becoming more prevalent. We've had a couple.of threads about agents wanting only one person as a shareholder or the majority shareholder.

Both of them together looks even worse. They care about you having 100%"of the shares because they don't want a company setup at all. They want you as an individual. How can than not be disguised employment?

[ChimpMaster]

Yeah, sure, I mean personal service is a distinguishing factor of employment, so a contract that demands personal service is inevitably not good.

But don't ask here. Ask a professional reviewer to look at the changes (they don't really need to look at the IPSE contract, because that's the point of the contract, but the contract only holds water when it isn't messed with).

Second thing sounds like a legal/compliance issue. It is not common, but also not unheard of, for agencies to request sole directorship, for example (I know you're direct).

Thanks JB. Unfortunately don't have time to review. Client has left it very late and there are 5 days left until renewal. Yes I've been pushing for 6 weeks, so there is a game afoot.

I had the same recently using the IPSE template.

Mine was a 'side letter' that their lawyer had come up with pushing liability onto me, confirming that I owned 100% of shares and some other guff that I wasn't going to sign. They also wanted to name me on the contract.

I pushed back and got the amendments removed, but my client is very small so it was probably easier. I did ask why my share structure was relevant, but never got an answer apart from "our lawyer suggested it". But perhaps it's becoming a thing.

Ah a side letter, now that's easy and convenient to ignore! I wish mine was so easy. I will certainly be pushing back too. This just all smacks of recently graduated wanna-be legal 'experts'; can't even explain why they need to have your name on a contract or for you to be 100% owner of the business.

The first one is really bad. You could easily argue it becomes an agreement to take you on so doesn't look like a business at all. I do believe it makes a mess of your substitution clause for the same reason. If they want to contract you as a named individual how can you substitute without being in breach. It also gives the impression they won't accept one either.

Second one is becoming more prevalent. We've had a couple.of threads about agents wanting only one person as a shareholder or the majority shareholder.

Both of them together looks even worse. They care about you having 100%"of the shares because they don't want a company setup at all. They want you as an individual. How can than not be disguised employment?

Thanks NLUK. I agree, hence why I wanted to vent here and check that I wasn't just flipping at the 20% rate cut.

I might ask them, if they want to keep the "individual" clause then to change it to "initially the individual will be...". Kinda of a half-way house, seeing as I like to give people options

The 100% share ownership confounds me still. Why would that affect the client? I don't recall any legal ruling involving this. What if I just ignore this and sign the contract anyway? (the contract says they can terminate me if they discover that the company is not wholly owned by me... but really, I don't care if they want to).

[WTFH]

The 100% basically says you do not report to anyone above or beside you, that you are on your own.
It reinforces the disguised employment.

[SlipTheJab]

20% cut! I'd tell them to shove it

[Lance]

20% cut! I'd tell them to shove it

This^^^^^^^^ Especially if direct.
Grow some.

[ChimpMaster]

20% cut! I'd tell them to shove it

yea I know. I've been on an 'emergency' rate for a while now but it still feels like a massive kick in the teeth after all I've done for this client.

hence why if it's time to burn the suit, so be it.

[jamesbrown]

This^^^^^^^^ Especially if direct.
Grow some.

Er, I'm pretty sure he can make up his own mind. If it's convenient and he's close to retiring (IIRC from earlier posts), it's a trade-off.

OP, I'd play hardball on the first issue, no question, because it undermines your agreement up to this point (as well as being bad going forward). Second issue, I wouldn't necessarily care; either you can or cannot meet that requirement, but it's more than likely an over-zealous compliance/legal numpty.