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Contract clause re: Employment Business right to audit for 6 years after contract!

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    Contract clause re: Employment Business right to audit for 6 years after contract!

    Hi all, looking for some thoughts on this please. I've searched and found one relevant previous thread

    https://forums.contractoruk.com/busi...l-clauses.html

    but it was a year ago and it didn't have a lot of discussion about the audit clause in particular. The clause I'm being asked to sign up to is very similar to the one in that thread - basically that for the duration of the contract *and for six years thereafter* ! the employment business (through whom I'm contacted to the end client) can, on provision of notice, enter my business premises and audit what they like (I'm paraphrasing, obviously, but that's about the size of it).

    It's a longish clause and feels pretty onerous.

    Are clauses like this now commonplace?

    What are your views on them? I think I've seen something similar one before, a couple of years ago, but it was in ai situation where I was already contracting direct to the client and they implemented a blanket policy to go via agents. Under the circumstances, the client (who were very keen for me not to be peed off or inconvenienced) agreed with the agent to waive all clauses I didn't like the look of - and since the agent had done nowt to recruit me and the whole thing was money for nowt, they were comfortable doing this. Therefore I've never had to properly argue this before...


    EDIT: OK so I challenged the clause and tried to get it removed. They held firm. I then suggested amendments to reflect remunerating me for cooperation with such an audit (also tried to get the 6 years reduced). Again, they held firm. This happened whilst they were holding firm on a few other things but making reasonable concessions on other aspects, and whilst on other points relating to different clauses we had a sensible dialogue, on this one I was just blocked. It actually made me more nervous about it rather than anything else.


    Ultimately I gave up on trying to get paid for my time in favour of the thing that was more important to me. The drafting of the original clause was both swingeing and quite sloppy - I'm not even sure it was intentional but it was drafted such that they really had the right to come in - including entering premises - and look at whatever they wanted, for whatever reason. I managed to get wording inserted - helped by some legal advice - to limit the purpose to verifying compliance with the contract terms. That was the only concession I won. It was the last outstanding point in the negotiation and clearly there will be some who say 'should've walked away', however whilst I did have a few other irons in the fire contract-wise, I wanted this contract and I'm due to start imminently so...

    Finally, the agent did say that he's not aware of the right ever having been exercises. Which is pretty much what I'd expect. However it's not sensible to sign away rights even if you think somebody will never take advantage of what you're signing away! Ultimately, I decided this was a risk worth taking.

    My own thoughts? This is financial services industry - very regulated, very risk averse. I wonder if this is part of an overall strategy to demonstrate an appropriate level of control/ oversight over contractors and it may even flow down through from the client via 2 agencies. As I mentioned in a comment previously, I wonder if it's just something that everyone has in their heads as 'it's a must-do clause, it can't be changed' which is often very hard to challenge even if nobody really understands why!!

    If anyone else has any more insight I shall be glad to hear it but the above is the conclusion I've come to from the combined effects of discussing with my family members who are auditor and solicitor respectively, my own research and thinking.
    Last edited by Glencky; 10 August 2018, 14:27. Reason: provide update with outcome

    #2
    As long as they’re not wanting you to pay for the audit, and you’re not doing anything dodgy I don’t see a problem.
    See You Next Tuesday

    Comment


      #3
      I'd have thought it went without saying but probably not..! No, I'm not doing anything dodgy. I have nothing to hide here - it's the general right and the 6 years that bothers me. And no, they're not offering to pay me either - nothing in there at all about payment, indeed the opposite, that MyCo will provide free assistance and access.

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        #4
        Audit you for what reason?

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          #5
          Sorry, I should have said that. I'd dearly love to C&P it but not risking it.

          Worded such that it's for any reason (because it says "but not limited to") but the examples given relate to ensuring MyCo is performing its services in line with the agreement.

          Comment


            #6
            Personally I would be askiing for the clause to be removed as it seems unreasonable. What would they need to check once you’re out of contract? How can you still be performing services once the contract is terminated?

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              #7
              Yes, I agree with you completely - I've asked for it to be removed (along with many other changes). I've 'won' loads of points but this is one on which they're really sticking and I don't quite get why. Apart from anything else, it's also somewhat in conflict with the (standard and understandable) clauses in there about confidentiality. Essentially, once the contract is finished I will have in my possession only the basic stuff like the actual contract, invoices and timesheets etc - nothing from the client or anything like that.

              There are only so many points you can win in a negotiation like this so given how unlikely the whole thing is to happen, I think I'm going to settle for adding in clauses to ensure that they have to pay me for my time (at the same rate as the contract rate!) and also cover any out of pocket expenses e.g. 3rd party legal or accountancy fees, travel expenses etc, in relation to any such audit.

              I think if they'll agree to that then bully for them, I'll sign it.

              It has occurred to me (after posting the thread) that this is in there more because THEY can point to it to THEIR auditors and say 'all our contracts contain this kind of clause so we have the right to 'go in' and inspect' - i.e. the kind of thing that realistically is never going to be used. That would be a good reason for them to hold the line of always having it in there. (OK, not a 'good' reason but it might explain why they're being more intransigent than it really seems to warrant, over it.)
              Last edited by Glencky; 9 August 2018, 18:23. Reason: correct typo

              Comment


                #8
                If you get any further with this could you come back and tell us? The other thread similar didn't come to any conclusion either so would be interesting to see what they expect this to cover and their willingness to remove it.
                'CUK forum personality of 2011 - Winner - Yes really!!!!

                Comment


                  #9
                  Get it reduced to for the duration of the contractual engagement plus one month or some such shorter period.

                  Or ask them why the clause is so important to them?
                  The greatest trick the devil ever pulled was convincing the world that he didn't exist

                  Comment


                    #10
                    Hi, yes I was already planning to come back and update for exactly the reason you say, NLUK - that it'll help the knowledge of the group.

                    I've almost concluded this, have managed to gain some ground but nothing like what I expected.

                    I'll update once it's concluded (i.e. contract signed!) but simplistically, I've gained very little ground and couldn't get much out of them as to 'why'.

                    It happens that conveniently one close family member is an auditor and another is a solicitor (insert own joke about what a barrel of laughs we all are at parties...) so I've had good perspectives on this which have helped me win the limited changes I have.

                    Meanwhile, I found this online from a law firm I am acquainted with. If you were really interested (as obviously I was) you could scroll through the entire case study but if you're not, you can skip to the bottom few bullet points which detail best practice on audit clauses - most of which was not complied with in the one I received, obviously mostly in ways which benefited the large company on the other side of this rather than MyCo!

                    https://www.penningtons.co.uk/news-p...t-for-purpose/

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