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Advice on signing a new and first limited company contract with an agency

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    Advice on signing a new and first limited company contract with an agency

    Hello,
    I have my own limited company and have just finished reading through 12 pages of fine print for a 6 month assignment. Interestingly the contract simply states "services" are to be delivered over a 6 month period and has clauses for failure to deliver the services. The services defined are

    "consultancy services to the client at the contract site for the purposes of a specific project".

    This is not what I discussed at the interview - during the interview the role was a combination of support, systems admin, consultancy and project related (i.e. bit of an all round mix). I come from a professional services background and am used to tight project definitions, so I'd never write a proposal for "consultancy services" as that could be install a server or write a spread sheet package that can rival Excel (e.g. massively different efforts, but yet both can fall within "consultancy services"). As this is my first contract, am I being pedantic? Are most contracts written in this woolly fashion?

    In addition, I can't see/understand a valid termination clause. There are lots of clauses about the agency terminating the contract if it wants, but vague ones for my limited company, i.e one of the clauses states:

    Either party shall be entitled to terminate this agreement forthwith by notice in writing to the other party if the other party shall commit or allow to be committed:

    a) A breach of the terms and conditions listed.
    b) Save for the bona fied purpose of solvent reconstruction or amalgamation, if any action application or processing in respect of (i) a voluntary arrangemenr or composition or reconstruction of it's debts; (ii) the presentation of an administration petition; (iii) it's winding up or dissolution (iv) appointment of a liquidator , trustee, administrative receiver or similar officer (v) similar action, application or proceeding in any jurisdiction to which its subject or if it is unable to pay its debts

    I'm not quite sure what b means other than a vague understanding about bankruptcy!

    The service week is 35 hours, which I presume is based on 5 days a week, 1 hour for lunch.

    There's also an opt out clause which I've decided to not sign after reading the pros and cons of opt-in/out and business regulations 2003
    Opt-in, opt-out?Legal specialist Egos comments :: Contractor UK
    Opt-in, opt-out?Legal specialist Egos comments :: Contractor UK

    Apologies for the lengthy post, just thought I'd get some advice as I've never signed one of these before.

    Thanks in advance

    #2
    You want to avoid the mix offer. That's what permies do and will put you under Direction and Control which is one of the three main pillars of defence for IR35. You'll also be struggling not to be part and parcel very quickly.
    You are a specialist that should be brought in to deliver a fixed scope piece of work like a supplier, not a bit of everything like a permie.
    If they say that's what you'll do, we just put it in the contract to look good for IR35 you are in even bigger trouble because working practices trump the contract and will probably mean your substitution will be treated as a sham as well. There is an unfettered substitution clause isn't there???

    You must get the contract AND working practices reviewed by QDOS or the like before you sign it cause it sounds like you've got problems to me.

    Why is that termination clause vague. Looks pretty nailed to me. If it doesn't say you can give X number of days notice to terminate then it means you cannot terminate early. QDOS will be able to advise on this as well.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      NLUK is right about the mix offer, and that's exactly what I thought reading the OP's post. I would add, though, that vague and poorly defined service descriptions provided by agents are pretty common in my experience. Once I knew what I was doing, I'd draft a line to replace whatever the agent had written and usually (but not always) the agent would amend the contract.

      A better defined project description may help with your D&C defence, and while it would be better to get it changed to something more specific, it's not the end of the world. In fact, it's better as it currently is than if you start talking about general support, and so on.

      Comment


        #4
        Thanks for the reply guys

        What are your thoughts on opting in or out of the 2003 business regulations - does it impact on IR35? is it worthwhile to stay in for added protection? I'm likely to be in scope for IR35 anyway, so it's in my advantage to stick with opting in?

        Cheers

        Comment


          #5
          Opt status has almost zero effect on IR35 so don't worry about that.
          'CUK forum personality of 2011 - Winner - Yes really!!!!

          Comment


            #6
            I think I'm in a minority here in that I always opted out of the agency regs. But the general advice is to opt in, and I'd follow that tbh.

            I only opted out because it didn't really bother me, and I never had any problems as a result, but being opted in does appear to give you more protection with getting invoices paid, etc.

            Edit - wait, have I got opt in and out the right way round?? Been a while since I did it - whichever is the one the agent wants you to do is the one I always went with. Contrary to advice on here.

            Comment


              #7
              Originally posted by GillsMan View Post
              I think I'm in a minority here in that I always opted out of the agency regs. But the general advice is to opt in, and I'd follow that tbh.

              I only opted out because it didn't really bother me, and I never had any problems as a result, but being opted in does appear to give you more protection with getting invoices paid, etc.

              Edit - wait, have I got opt in and out the right way round?? Been a while since I did it - whichever is the one the agent wants you to do is the one I always went with. Contrary to advice on here.
              Opt out is what agencies want you to do.

              You want to opt in as that means a signed timesheet is all that's required for the agency to have to pay you...

              Originally posted by northernladuk View Post
              Opt status has almost zero effect on IR35 so don't worry about that.
              Not quite true, it often means a far crappier contract if the agency uses certain law firms (for example lawspeed).
              Last edited by eek; 1 September 2016, 11:05.
              merely at clientco for the entertainment

              Comment


                #8
                You could come unstuck if you decide to opt-in. Some agencies simply won't work with contractors that opt-in. They can't legally make you opt-out but they can withdraw you and put someone else in place.

                From the agencies POV, you opting-in bascially says 'in 13 weeks time I'm gonna screw you and go direct to the client'.

                You don't need to be opted in to get the payment terms you mentioned, just get these same terms added to your contract.

                Comment


                  #9
                  Originally posted by Agent View Post
                  You could come unstuck if you decide to opt-in. Some agencies simply won't work with contractors that opt-in. They can't legally make you opt-out but they can withdraw you and put someone else in place.

                  From the agencies POV, you opting-in bascially says 'in 13 weeks time I'm gonna screw you and go direct to the client'.

                  You don't need to be opted in to get the payment terms you mentioned, just get these same terms added to your contract.
                  Many agencies survive on being good enough that there is no incentive for either the agency or end client to pull tricks.

                  Also even if I've opted in assuming you've got a decent contract with the end client the end client should be compensating you for finding me.. Your argument only works if you sign any old contract the end client offers you and haven't thought things through......
                  merely at clientco for the entertainment

                  Comment


                    #10
                    Originally posted by eek View Post
                    Many agencies survive on being good enough that there is no incentive for either the agency or end client to pull tricks.

                    Also even if I've opted in assuming you've got a decent contract with the end client the end client should be compensating you for finding me.. Your argument only works if you sign any old contract the end client offers you and haven't thought things through......
                    That may be the case sometimes but we all know that agencies like contractors to be opted-out. The initial compensation may not be as much as you think. Agencies are not gonna get rich getting paid for 13 weeks margin then missing out on another 12 months because the contractor / procurement suddenly realised that they can hire direct without a cost.

                    It's not that the client pulls tricks it's that things change. At a agency that I previously worked, we lost 15 contractors in one hit because the opt-out process hadn't been followed correctly. A new opt-out savvy procurement guy joined our client and realised that he could make a huge saving by hiring them all direct. It completely f*cked the agency who had made investments and hires on the basis of having this contract revenue. It only ever happened once, but guess how many opt-in contractors we put forward after that happened....zero, nada, none.

                    I'm not saying it will happen but just making the OP aware that this is a red flag for any recruiter. If it's 50/50 between you and another contractor who's opted out then I guarantee it's a deciding factor.
                    Last edited by Agent; 1 September 2016, 14:10.

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