Giant want me to personally indemnify them

[Forbes Young]

HI all,

I'm after a bit of advise, I've been contracting for 20 years now, and this is my first request for advise.

My client who has been using my co's service for the past 9 months has requested that I move my contract to a different intermediary, the new intermediary (giant precision services) is requesting that I personally (ie not my co) act as a guarantor for my co in respect of any losses that giant suffer. ie if giant suffers losses in line with the conditions in the contract and attempt to recover them from myco , and myco refuses or is unable to pay them, then I personally am liable for the losses.

Has anyone else seen this from Giant? and does anyone have any advice?

My feeling is to reject this ,but I suspect it will end up getting messy if I do (ie possible loss of contract).

Never come across this before with any of our clients. If you are operating as an independent contractor through your own ltd company, the normal situation in this area is that contractually your company would need to set up Professional Indemnity, Public Liability and Employers Liability insurances before you commence work on a contract. A copy of the insurance documentation is often required to be seen/retained by our clients' clients. Have they asked you about your company's insurances?

[20years]

Thanks for the clarification but I am still not sure - who is your B2B contract with? What is Giant's function in this - are they acting as accountant and agency or just agency?

They are acting as agency, I have my own accountant.

If you are operating as an independent contractor through your own ltd company, the normal situation in this area is that contractually your company would need to set up Professional Indemnity, Public Liability and Employers Liability insurances before you commence work on a contract. A copy of the insurance documentation is often required to be seen/retained by our clients' clients. Have they asked you about your company's insurances?

Yes, there is a requirement that my co has the 3 insurances up to certain minimum amounts. This is normal and what I expect. What I don't expect is being asked to personally act as guarantor to cover any of giants losses relating to this contract.

With regards to contracts , see below for a summary of what I am being asked to sign:-

1. A fairly typical B2B contract between my co and GP, this is a fairly standard looking contract ,very similar to any other b2b contract that we have signed over the last 20 years, I have no real issues with this.

2. A separate document that GP are calling a deed of indemnity which requires me personally to act as guarantor for my co such that GP can claim any losses from me personally instead of perusing my co. There are 3 parties that are expected to sign this , they are GP, myself (in a personal capacity) & director of My co.

Hopefully this clarifies, I think that this is hard to understand because its so out of the ordinary, and so not standard practice.

[Goatfell]

HI all,

I'm after a bit of advise, I've been contracting for 20 years now, and this is my first request for advise.

My client who has been using my co's service for the past 9 months has requested that I move my contract to a different intermediary, the new intermediary (giant precision services) is requesting that I personally (ie not my co) act as a guarantor for my co in respect of any losses that giant suffer. ie if giant suffers losses in line with the conditions in the contract and attempt to recover them from myco , and myco refuses or is unable to pay them, then I personally am liable for the losses.

Has anyone else seen this from Giant? and does anyone have any advice?

My feeling is to reject this ,but I suspect it will end up getting messy if I do (ie possible loss of contract).

I experienced something similar a few years ago and when I queried it, the reply was that it was to idemnify them in respect of tax and NI contributions. This was around the time the AWR were introduced, so it may have been a mis-guided reaction to them.

[TykeMerc]

I experienced something similar a few years ago and when I queried it, the reply was that it was to idemnify them in respect of tax and NI contributions. This was around the time the AWR were introduced, so it may have been a mis-guided reaction to them.

That may well be the case, but for such a clause to be acceptable it would have to be clearly worded that way with no ambiguity that it was restricted to Tax and NI.
Any attempt to put in the clause the OP talked about would be an instant no from me at least.

[20years]

I experienced something similar a few years ago and when I queried it, the reply was that it was to idemnify them in respect of tax and NI contributions. This was around the time the AWR were introduced, so it may have been a mis-guided reaction to them.

This particular document does not limit the claim to Tax/NI contributions, it is worded specifically to include all and any loss to the agency. I'm not going to post the actual text of the deed (confidentiality and all that), but it definitely covers everything and anything without limit.

[TykeMerc]

This particular document does not limit the claim to Tax/NI contributions, it is worded specifically to include all and any loss to the agency. I'm not going to post the actual text of the deed (confidentiality and all that), but it definitely covers everything and anything without limit.

In which case that would be an absolute deal breaker to me, not acceptable in any form. They're trying to get you to act in a way that a Lloyds Name would struggle with let alone a contractor. They are totally taking the mickey.

[Goatfell]

This particular document does not limit the claim to Tax/NI contributions, it is worded specifically to include all and any loss to the agency. I'm not going to post the actual text of the deed (confidentiality and all that), but it definitely covers everything and anything without limit.

If they won't remove the clause then decline gracefully/tell them to do one*

*delete as appropriate

[Pondlife]

Thanks for the clarification but I am still not sure - who is your B2B contract with? What is Giant's function in this - are they acting as accountant and agency or just agency?

At first from their website they look a little bit MSC but it also looks like a service that they off to Rec Agents. i.e. let us manage your contractors for you.

[LisaContractorUmbrella]

At first from their website they look a little bit MSC but it also looks like a service that they off to Rec Agents. i.e. let us manage your contractors for you.

That's what occurred to me Pondlife but if they are only offering a software solution to recruiters why the need for the indemnity for taxes from the OP

[tractor]

...

A note the the OP and the recruiters watching this thread...

companies employing only their owner where that employee also owns 50% or more of the issued share capital in the company.

...are exempt from the requirement to be covered by Employers Liability and have been so since 2008.

Whilst there is no legal requirement, you can of course purchase insurance if you so choose.