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    Default What value is there to a contract; in the event of not enough hours of work ?

    I'd be interested to hear what others think the recourse if any is when work dries up partway through a contract. I am not moaning about such a situation, simply trying to understand how others have dealt with it short of simply moving on.

    Obviously it would be unwise to state minimum hours expected and mutuality of obligation in any written sense in a contract (unless you want to be in IR35).

    Leaving that aside though, is there not a basic obligation, for want of a better word, that both parties to a contract for work to be carried out honour their side of their bargain (the client requesting a reasonable amount of work and the contractor undertaking that amount of work in a reasinable time, to quality etc) ?

    And if so what recourse might there be ? If not, what value does a contract have..perhaps its a very flimsy thing after all and literally not worth the paper..

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    Quote Originally Posted by Camel View Post
    I'd be interested to hear what others think the recourse if any is when work dries up partway through a contract. I am not moaning about such a situation, simply trying to understand how others have dealt with it short of simply moving on.

    Obviously it would be unwise to state minimum hours expected and mutuality of obligation in any written sense in a contract (unless you want to be in IR35).
    Some knowledge of IR35 so good start but.....

    Leaving that aside though, is there not a basic obligation, for want of a better word, that both parties to a contract for work to be carried out honour their side of their bargain (the client requesting a reasonable amount of work and the contractor undertaking that amount of work in a reasinable time, to quality etc) ?
    You fail not understanding MOO. The whole point point of MOO is to make sure there is no obligation to give or do work. It is a huge IR35 pointer. (Mutuality of Obligation you are looking for)

    And if so what recourse might there be ? If not, what value does a contract have..perhaps its a very flimsy thing after all and literally not worth the paper..
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    Quote Originally Posted by Camel View Post
    I'd be interested to hear what others think the recourse if any is when work dries up partway through a contract. I am not moaning about such a situation, simply trying to understand how others have dealt with it short of simply moving on.

    Obviously it would be unwise to state minimum hours expected and mutuality of obligation in any written sense in a contract (unless you want to be in IR35).

    Leaving that aside though, is there not a basic obligation, for want of a better word, that both parties to a contract for work to be carried out honour their side of their bargain (the client requesting a reasonable amount of work and the contractor undertaking that amount of work in a reasinable time, to quality etc) ?

    And if so what recourse might there be ? If not, what value does a contract have..perhaps its a very flimsy thing after all and literally not worth the paper..
    Let's take a 3 month contract as an example.

    This 3 month contract for project X should have the words "this is an estimate" written on it. If the work is completed within 2.5 months, it would be bad (from an IR35 and MOO point of view) to just sit around allowing the client to pass you little jobs that needed doing, that weren't related to project X.

    It has only happened to me once, but i got binned 1 week before the contract was due to end (due to lack of work).

    The "estimate" advice above is something i've only just learnt about. It is something that i will be doing at renewal/next contract time.

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    Ah, so all the work doing IR 35 compliant contract paid off - and so we are (ironically) completely unprotected in writing and cannot be so protected.

    I guess I was thinking more about it in the sense of the basics of any contractual arrangement buying\supplying goods or services, duty to act in good faith as the lawyers might call it on both sides, not breaking trust and such.

    Sounds like "not worth the paper" was about right in this (every ?) case

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    Quote Originally Posted by Camel View Post
    Ah, so all the work doing IR 35 compliant contract paid off - and so we are (ironically) completely unprotected in writing and cannot be so protected.

    I guess I was thinking more about it in the sense of the basics of any contractual arrangement buying\supplying goods or services, duty to act in good faith as the lawyers might call it on both sides, not breaking trust and such.

    Sounds like "not worth the paper" was about right in this (every ?) case
    The "3 months" doesn't mean much. Beware of clients that think they own your ass for those 3 months.

    Of course, if after 2.5 months the client want you to work on some other project then by all means get another contract/schedule drafted stating that you'll be working on the other project.

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    Quote Originally Posted by Camel View Post
    Ah, so all the work doing IR 35 compliant contract paid off - and so we are (ironically) completely unprotected in writing and cannot be so protected.

    I guess I was thinking more about it in the sense of the basics of any contractual arrangement buying\supplying goods or services, duty to act in good faith as the lawyers might call it on both sides, not breaking trust and such.

    Sounds like "not worth the paper" was about right in this (every ?) case
    On both of my last 2 (approx 9 mth each) contracts my managers have realised multiple times during the course of the engagement that work was possibly drying up for their hired contractor, and have then dug in to find work they can give me. This has included picking up low priority tasks, database-housekeeping type work and so on. I believe both of them acted primarily out of good faith, of knowing that they have me on till x date and that they have an obligation (moral if not legal) to give me work.

    Those quoting "mutuality of obligation" and "IR35" and such legalese are assuming that your average line manager is up to speed on such things.

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    Quote Originally Posted by theroyale View Post
    On both of my last 2 (approx 9 mth each) contracts my managers have realised multiple times during the course of the engagement that work was possibly drying up for their hired contractor, and have then dug in to find work they can give me. This has included picking up low priority tasks, database-housekeeping type work and so on. I believe both of them acted primarily out of good faith, of knowing that they have me on till x date and that they have an obligation (moral if not legal) to give me work.

    Those quoting "mutuality of obligation" and "IR35" and such legalese are assuming that your average line manager is up to speed on such things.
    All of which is client direction. I hope you have IR35 insurance.

    The manager might not be up to them but you should be and advising the managers on it and if they don't act you should be.
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    Quote Originally Posted by theroyale View Post
    On both of my last 2 (approx 9 mth each) contracts my managers have realised multiple times during the course of the engagement that work was possibly drying up for their hired contractor, and have then dug in to find work they can give me. This has included picking up low priority tasks, database-housekeeping type work and so on. I believe both of them acted primarily out of good faith, of knowing that they have me on till x date and that they have an obligation (moral if not legal) to give me work.

    Those quoting "mutuality of obligation" and "IR35" and such legalese are assuming that your average line manager is up to speed on such things.
    I am not comfortable at all with such an unspecified arrangement, I would rather a new schedule was drawn up or they were simply transparent about time available if any so I could budget accordingly\move.

    Whether the line manager gets IR 35 or not is not going to be relevant if HMRC come knocking and whilst I would never want to pass up work that might be coming in the long run if that style of working put me inside IR 35 and opened the whole can of worms going back years its a false economy I think (but each to their own, I am just personally not comfortable about it)

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    Quote Originally Posted by Camel View Post
    I am not comfortable at all with such an unspecified arrangement, I would rather a new schedule was drawn up or they were simply transparent about time available if any so I could budget accordingly\move.

    Whether the line manager gets IR 35 or not is not going to be relevant if HMRC come knocking and whilst I would never want to pass up work that might be coming in the long run if that style of working put me inside IR 35 and opened the whole can of worms going back years its a false economy I think (but each to their own, I am just personally not comfortable about it)
    There seems to be a lot of talk on these forums about being at-risk for an HMRC IR35 investigation but not enough actual experience. How exactly does HMRC investigate potential breach of IR35 regulations? Obviously they start by poring over your contract (and find that it has all the necessary clauses in there, Sub, MOO and so on), what next, do they contact the line manager to find out what the nature of the work packages given to the contractor actually were? My thinking is - why would a line manager in such a situation contacted by HMRC say anything other than what he is expected to, i.e. that these were well-defined pieces of work with no obligation for future work etc etc.. Remember client companies have their own reasons for protecting themselves and keeping the contractor situation status-quo (not having to pay employers NI etc)
    Last edited by theroyale; 29th February 2012 at 10:35.

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    Quote Originally Posted by theroyale View Post
    There seems to be a lot of talk on these forums about being at-risk for an HMRC IR35 investigation but not enough actual experience. How exactly does HMRC investigate potential breach of IR35 regulations? Obviously they start by poring over your contract (and find that it has all the necessary clauses in there, Sub, MOO and so on), what next, do they contact the line manager to find out what the nature of the work packages given to the contractor actually were? My thinking is - why would a line manager in such a situation contacted by HMRC say anything other than what he is expected to, i.e. that these were well-defined pieces of work with no obligation for future work etc etc.. Remember client companies have their own reasons for protecting themselves and keeping the contractor situation status-quo (not having to pay employers NI etc)
    Wrong. He will say exactly what he does. You have already stated there is an assumption he knows what all these MOO etc is and he is aware of contracting practice. Even if he does he will not defend you. He will state his exact position and if that is dishing out random bits of work he will say that. I believe the JLJ case had the client shaft him with the reality of the situation.

    You are right, they do have to protect themselves and this is telling the truth, not bending it to suit you. How you work is none of their business.

    Feel free to ignore IR35 on lack of evidence of people being caught at your peril. Why not cancel your PCG insurace, PI/PL and any other insurance infact.

    You are business, your should act like a business even if the chance of being investigated is slim. It might not happen but when it does it is going to seriously impact your life.

    Following a few basic IR35 pointers, including not being under client control, is not a deal breaker for you so not to be ignored.
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