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Substitution clause being argued in my SDS appeal

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    Substitution clause being argued in my SDS appeal

    Hi, Apologies if a similar thing has bee mentioned I did a search and couldn't see anything.

    So I've had my SDS (Status Determination Statement) and the client has found me inside IR35.
    They have used the CEST tool and for he question
    “Has the worker ever sent a substitute to do this work?”
    They have answered
    "No it has not happened".

    However I have provided a substitute on a number of occasions, paid them from my company account and have never once had the client reject them.

    They argued
    "Firstly, we believe that due to the nature of the work, requirement for vetting/ appropriate security clearances and the lengthy onboarding process, any substitute would not be a viable alternative to you performing the work. This would suggest the right is not genuine or exercisable and no ‘blanket’ or unfettered right to provide a substitute exists.
    A key consideration here is that the contractual right to provide a substitute is not unlimited and we would be able to exercise a level of control over any exercising of this right (e.g in the event we disagreed the proposed substitute was suitably qualified). In your appeal you state that you have previously sent a substitute. We did look into whether it could consider this as a ‘genuine’ use of the substitution clause within CEST. Whilst you have not provided specific examples, it is our understanding that the individual(s) used as a substitute were contractors either already engaged or approved by us. On this matter, the ESM at ESM11045 states that: ‘A client will have the right to reject a substitute if: - the contract specifies that the worker will perform the work and is silent on substitution; - the hirer has an explicit right to reject a substitute; - the worker can only provide a substitute from a pre-approved pool of workers.’ (emphasis added) In the event LM would only consider or accept a substitute from its pre-approved pool of contractors, the ESM confirms that this demonstrates LM’s right to reject a substitute. On this basis, this cannot be considered for the purposes of CEST if the right exercised was not genuine, but instead exercised in a way designed to demonstrate substitution for these purposes"

    My thoughts were that that the quoted ESM (Employment Status Manual) refers to the question about weather of not the client has the right to deny a substitute, that only get asked if the preceding "Has the worker ever sent a substitute to do this work?" question is not answered with a "Yes, and they were accepted"

    Apologies for the long question.
    I guess what I'm asking is given that I have provided a substitute (on numerous occasions) does their argument hold any water?

    #2
    So they've entered the answers incorrectly?

    Do you have proof? That'll be the key.
    The greatest trick the devil ever pulled was convincing the world that he didn't exist

    Comment


      #3
      Originally posted by JMan View Post

      Apologies for the long question.
      I guess what I'm asking is given that I have provided a substitute (on numerous occasions) does their argument hold any water?
      But do they know you provided a substitute, or did you do it under cover?
      Did the substitute get a separate logon to their systems or did you share yours with them?

      Taking what you've written, it sounds like they are submitting false information to the CEST. Which would be grounds for appeal.
      Having said all that. In reality. If the client wants to, they'll still declare you inside and you're left with little choice to suck it up or walk.

      See You Next Tuesday

      Comment


        #4
        Originally posted by Lance View Post
        Having said all that. In reality. If the client wants to, they'll still declare you inside and you're left with little choice to suck it up or walk.
        That's the obvious outcome of course.

        However, if the OP has been working for that client for some time, safe in the knowledge that contract and working practices - including, apparently, multiple instances of approved substitution - place him firmly outside IR35, he may be unwilling to just walk away after an incorrect SDS decision because allowing that to stand implicitly marks all his previous work in that role as being inside IR35. Which could be expensive as well as unfair.

        Comment


          #5
          I've got a couple of problems with this post and it comes down to the minute detail which is mainly missing.

          First off.
          However I have provided a substitute on a number of occasions, paid them from my company account and have never once had the client reject them.
          I'm finding this hard to believe but this is most likely because it's so uncommon for most of us. I'm also wondering about why it's on a number of occasions. This doesn't sound right to me either. Usually you'd provide one for a good period as it takes time to get them up to speed (in your own time) and they come on to site with their own pass and credentials and pick up seamlessly from you. Something doesn't sound right about your single statement and the fact the client doesn't seem to recognise it makes me wonder if you version of a substitute is different from what it should be or their expectations.
          Also them not refusing it doesn't mean it's valid. If they have the right to refuse without reason is enough.

          So my first question is have you truly used a substitute in the way the legislation expects or have you chucked a bit of holiday cover in or even subcontracted not substituted.

          So next their response

          "Firstly, we believe that due to the nature of the work, requirement for vetting/ appropriate security clearances and the lengthy onboarding process, any substitute would not be a viable alternative to you performing the work. This would suggest the right is not genuine or exercisable and no ‘blanket’ or unfettered right to provide a substitute exists.
          Nothing wrong with that. All perfectly clear terms. Did you gain these for your subs?
          A key consideration here is that the contractual right to provide a substitute is not unlimited and we would be able to exercise a level of control over any exercising of this right (e.g in the event we disagreed the proposed substitute was suitably qualified). In your appeal you state that you have previously sent a substitute. We did look into whether it could consider this as a ‘genuine’ use of the substitution clause within CEST. Whilst you have not provided specific examples, it is our understanding that the individual(s) used as a substitute were contractors either already engaged or approved by us. On this matter, the ESM at ESM11045 states that: ‘A client will have the right to reject a substitute if: - the contract specifies that the worker will perform the work and is silent on substitution; - the hirer has an explicit right to reject a substitute; - the worker can only provide a substitute from a pre-approved pool of workers.’ (emphasis added) In the event LM would only consider or accept a substitute from its pre-approved pool of contractors, the ESM confirms that this demonstrates LM’s right to reject a substitute. On this basis, this cannot be considered for the purposes of CEST if the right exercised was not genuine, but instead exercised in a way designed to demonstrate substitution for these purposes"
          Blimey. These people have done their homework. All that is a pretty indepth and well researched response. Maybe some kudos for them there. It also points at my first question, was it a proper substitute. If you've just got some cover from an existing contractor then I'd say no it's not a proper sub either. It's just cover. It also mentions the right to refuse which I mentioned above. If they want the right to say no then it can't be considered an IR35 pointer as it's fettered which has always been a no no.
          My thoughts were that that the quoted ESM (Employment Status Manual) refers to the question about weather of not the client has the right to deny a substitute, that only get asked if the preceding "Has the worker ever sent a substitute to do this work?" question is not answered with a "Yes, and they were accepted"
          I've not seen the questions and still have a problem with using historic information. The question should be around the future. Will the client accept an unfettered substitution going forward. The answer is no so you are done. I don't really see what happened in the past has any bearing on the future, particularly if the same question is applied to someone new joining. In that case the question is worthless.

          So it reads to me the client may accept a fettered right to substitute but that's no good for an outside determination. It's also not the only clause that can tip a decision inside/outside so there must be other factors that take it right up to the wire so it's not really a close one. There must be other problems pushing it towards inside.

          So the client has made their decision, they explained it very clearly and at that point you are done so IMO it does hold water. Nothing you can do now.

          Got to ask the same old question. Why are you asking this on the 16th of April, 10 days after it's kicked in. You are now royally ****ed. You are onsite with an outside to inside determination and are now low hanging fruit for HMRC.
          'CUK forum personality of 2011 - Winner - Yes really!!!!

          Comment


            #6
            Originally posted by Lance View Post

            But do they know you provided a substitute, or did you do it under cover?
            Did the substitute get a separate logon to their systems or did you share yours with them?

            Taking what you've written, it sounds like they are submitting false information to the CEST. Which would be grounds for appeal.
            Having said all that. In reality. If the client wants to, they'll still declare you inside and you're left with little choice to suck it up or walk.
            You can see a mile off where this is heading. Client has done their homework and they do not want the risk of a future IR35 investigation going against them. This person, for better or worse, is now a known source of discontent. If I were the manager at the client company this person would be given notice and asked to leave before that discontent spreads. After all, why would any company want a temporary resource engaged who simply isn't going to do as he/she is told? I wouldn't.
            Public Service Posting by the BBC - Bloggs Bulls**t Corp.
            Officially CUK certified - Thick as f**k.

            Comment


              #7
              Originally posted by Fred Bloggs View Post
              You can see a mile off where this is heading. Client has done their homework and they do not want the risk of a future IR35 investigation going against them. This person, for better or worse, is now a known source of discontent. If I were the manager at the client company this person would be given notice and asked to leave before that discontent spreads. After all, why would any company want a temporary resource engaged who simply isn't going to do as he/she is told? I wouldn't.
              I think it's worse than that. I think the OP has paid someone else to do the work, using the OP's user account.
              I've seen it before. And is usually results in instant termination for breaching security policies. And could involve the police depending on the details.
              That's why the client won't accept a ROS because they don't know. The OP thinks he's been smart because he thinks his evidence of using a subbie is a get out of jail card. Maybe I'm just being overly cynical.

              I doubt we'll find out though.

              But you're right. The client has made their mind up. One does wonder why they didn't just ban PSCs? Unless they have some outside contractors still on the books.
              See You Next Tuesday

              Comment


                #8
                Many thanks for the replies.

                So I have provided a substitute on two such occasions. Never has any substitute I've employed used my credentials (they have both been cleared/vetted etc), they have used there own. Each time I submitted noticed that I planned to use a substitute and I have paid them from my company account.

                I understand that they could argue "Does the contractor have an unfettered right to use a substitute?" but this question should not even be answered in the CEST tool as the preceding question "Has the contractor ever provided a substitute? " only has three possible outcomes.
                - "No its never happened"
                - "Yes, we did not accept them"
                - "Yes"
                The only one of those that is correct is the last.

                Is it not a case of business practice superseding subjective opinion of a clause in my contract that has already been enforced?

                Many thanks once again.

                Comment


                  #9
                  Originally posted by Lance View Post

                  I think it's worse than that. I think the OP has paid someone else to do the work, using the OP's user account.
                  I've seen it before. And is usually results in instant termination for breaching security policies. And could involve the police depending on the details.
                  That's why the client won't accept a ROS because they don't know. The OP thinks he's been smart because he thinks his evidence of using a subbie is a get out of jail card. Maybe I'm just being overly cynical.

                  I doubt we'll find out though.

                  But you're right. The client has made their mind up. One does wonder why they didn't just ban PSCs? Unless they have some outside contractors still on the books.
                  Yes, I see your point. If it's an SC or higher role then it is indeed instant dismissal and possible investigation. It's often the case of what's not said being far more important than what has been said. Any case, even a non SC role in most companies would have the same outcome. There's little to no point having security policies if you let your agency workers drive a coach and horses through them on a whim.
                  Public Service Posting by the BBC - Bloggs Bulls**t Corp.
                  Officially CUK certified - Thick as f**k.

                  Comment


                    #10
                    This is an unusually clued-up client, so I'm afraid you're a bit stuffed.

                    Agree with the sentiment that this client must have some high-value contractors to protect, otherwise they'd have been stupid to bother with PSCs; and they seem the opposite of stupid.

                    Comment

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