Forced Opt-out of Agency Regulations

[InPrincipal]

Payment. I have a contract saying i am paid 7 days after invoice. Nothing to do if the client doesnt pay etc. My contract is with the EB not the client.

OK, I get that. But this doesn't change if you opt-in, in fact you have more clout as you have the DTI behind you, rather than having to pay lawyers to defend your claim. My question is what's in it for you by opting out?

[InPrincipal]

You sure about that??

I thought the EB and client could still agree whatever commercial terms they felt like, thus whilst according to the letter of the law the client is allowed to take on the workseeker direct after 8 weeks or whatever the practical commercials already agreed may give the client a strong disincentive to do so.

Well, I can tell you that my insistence on opting in meant that the EB had to change their client contract to reflect the "letter of the law". No savvy client is going to sign up to overly restrictive terms if they don't have to. And even if they did, for opted-in contractors, such restrictive clauses are unenforceable in law. Therefore, opted in contractors are more desirable from the clients pov. Apart from this, they are also guaranteed contractors who's identity and qualifications have been verified.

[malvolio]

Well, I can tell you that my insistence on opting in meant that the EB had to change their client contract to reflect the "letter of the law". No savvy client is going to sign up to overly restrictive terms if they don't have to. And even if they did, for opted-in contractors, such restrictive clauses are unenforceable in law. Therefore, opted in contractors are more desirable from the clients pov. Apart from this, they are also guaranteed contractors who's identity and qualifications have been verified.

What a load of crap.

Proven ID - we all have to either prove that anyway these days, or get someone to prove it for us. There is no ACTUAL obligation in the agency regs to do so, it's merely how the agencies are interpreting them to cover their own backs, so they don't get prosecuted if you turn out not to have a work permit

Proven contractor? No, the only thing you are proving is that you are possibly not a free-standing business by seeking a set of employee-like protections. OK, you can argue they are about reducing business risk, by tying down payment terms and minimising handcuff clauses, but the whizzy clauses put into your contract have made you more employee-like and, guess what, clients don't want employees nor do they want the risk of people claiming employment rights.

Qualifications? Sorry but clients aren't interested in them for contractors 99% of the time, only agencies use them to slim down the pile of CVs they get for every job.

You opt in for safety and less risk, fair enough, but it does not make you more attractive to the client and the agency - quite the opposite in fact. You have just demonstrated how much extra work it entails for everyone other than you, for no real benefit. The agency regs are important in that they protect real temporary workers -the Office Angels level of people - but they are of limited value to a freelance, and in some cases can be detrimental, which is why the option to opt-out was set up.

[Denny]

What a load of crap.

Proven ID - we all have to either prove that anyway these days, or get someone to prove it for us. There is no ACTUAL obligation in the agency regs to do so, it's merely how the agencies are interpreting them to cover their own backs, so they don't get prosecuted if you turn out not to have a work permit

Proven contractor? No, the only thing you are proving is that you are possibly not a free-standing business by seeking a set of employee-like protections. OK, you can argue they are about reducing business risk, by tying down payment terms and minimising handcuff clauses, but the whizzy clauses put into your contract have made you more employee-like and, guess what, clients don't want employees nor do they want the risk of people claiming employment rights.

Qualifications? Sorry but clients aren't interested in them for contractors 99% of the time, only agencies use them to slim down the pile of CVs they get for every job.

You opt in for safety and less risk, fair enough, but it does not make you more attractive to the client and the agency - quite the opposite in fact. You have just demonstrated how much extra work it entails for everyone other than you, for no real benefit. The agency regs are important in that they protect real temporary workers -the Office Angels level of people - but they are of limited value to a freelance, and in some cases can be detrimental, which is why the option to opt-out was set up.

Staying opted in has no bearing whatsoever on IR35. That's what I always remain opted in. You have a far greater chance of being treated like a perma temp and then axed like a B2B if you opt out. The fact that you are protecting yourself will force the EB to act more rationally and arbitrate properly in a dispute with the client if you are opted in, as the DTI may become involved.

What's the point in having 7 days payment on your invoices if you've signed the opt out contract that stipulates 'no timesheet = no payment.' Your own terms won't protect you there when the client decides to shaft you.

You're being irresponsible and unbusinesslike not protecting your business interests by minimising risk.

[InPrincipal]

Proven ID - we all have to either prove that anyway these days, or get someone to prove it for us. There is no ACTUAL obligation in the agency regs to do so,

See Regulation 19 - have you actually read them?

Qualifications? Sorry but clients aren't interested in them for contractors 99% of the time, only agencies use them to slim down the pile of CVs they get for every job.

Not true, at least in my field. Certification is now a standard requirement.

.. but it does not make you more attractive to the client and the agency - quite the opposite in fact.

I didn't say it makes you more attractive to the agency, but if everyone opted in, they wouldn't have a choice.
Personally, I don't have a problem with making agents do a little something for their cut.

in some cases can be detrimental, which is why the option to opt-out was set up.

Please elaborate. There are a lot of vague references to it being detrimental, but no-one seems to be able to come up with anything concrete.
Seems to me that agencies have done a pretty good job of scaring contractors into signing away their rights without them actually bothering to find out what they are. As for making you look like an employee - that's drivel, opting-in is passive, it's the default. It's absolute nonsense to suggest that the fact that you haven't actively opted-out can be used against you. You've clearly bought the agency line.

[InPrincipal]

Most companies won't bother to challenge what they've agreed, if they are broadly happy with the PSL EB. Usually it's HR or SC that control the hiring managers' decisions on these things. You were probably lucky on this occasion.

If they weren't having to follow these rules, we would still be inundated with opt out notices prior to consideration for representation. As I've already said, these are not so forthcoming now as they were a 2-3 years ago.

Luck has nothing to do with contract negotiations. If I don't get what I want, I walk. I don't need anything bad enough to compromise my security or my integrity. Maybe I am lucky, or maybe I'm just really good
As for things being different now from 2-3 yrs ago, that hasn't been my experience at all. If anything, agents just assume contractors are going to opt-out and often draft in a clause to "help" them do so as standard. They always come out with the same old cliches - IR35 threats, "everybody else opts out", "we don't mind but the client insists you opt-out". All b0ll0cks.

[Denny]

Luck has nothing to do with contract negotiations. If I don't get what I want, I walk. I don't need anything bad enough to compromise my security or my integrity. Maybe I am lucky, or maybe I'm just really good
As for things being different now from 2-3 yrs ago, that hasn't been my experience at all. If anything, agents just assume contractors are going to opt-out and often draft in a clause to "help" them do so as standard. They always come out with the same old cliches - IR35 threats, "everybody else opts out", "we don't mind but the client insists you opt-out". All b0ll0cks.

The first part I disagree with, the second part I do agree with.

I think it is highly plausible that EBs who are bidding for large contracts with big multi-nationals to want to do everything they can to secure the contract on their own terms, if the client is being steadfast about slimmer margins. The negotiations part are almost bound to be at contractors' expense, you can bet your life on that! If the end-client has faith in the EB being able to deliver then they will place their entire trust in the EB to prove it - otherwise HR or supply chain will have to justify their own judgement on these matters to the biggest cheeses in the organisation that matter.

I suppose our experiences largely depend on what kind of work we specialise in. Perhaps there is more flexibility with direct contracts in IT being non-negotatiable with the client than in my field - hence the opt out is more noticeable with what you do.

I've certainly noticed the difference though.

[malvolio]

InPrincipal ->

Yes I have read them, and a few deailed commentaries on them.

As regards ID, the regs require that the agency satisifes themselves as to the identity of the candidate. It does not say you have to part with sensitive personal information to anyone who asks for it before there is even a hint of an offer on the table.

Taking that a bit further, a copy of a passport is not proof of identity, nor should such copies be made. The only legally acceptable proof of ID is by sight of the original in the holder's possession at which time a B&W copy can be made for record taking purposes.

(And in my case, a letter from my company secretary stating that they have ascertained my identity and will guarantee it if challenged has been sufficient for the last three gigs. The agent is contracting with MyCo, and MyCo is responsible for proof of ID, by accepting that assertion the agent's requirement has been met.)

As for the detrimental bit, re-read what I said about employee-like clauses. For one example, if you are trying to set up a contract for services, you really don't want individuals named in the contract, but if the agency doesn't do so, how valid are their efforts to ascertain the ID of the individual in question. And once you are individually named in the contract, it could be held to be a contract of service and hence inside IR35.

Similarly, guranteed payment terms means you cannot make a loss on the contract, hence it cannot be a commercial contract for services since there is no risk involved. And so on and so on...

[Denny]

InPrincipal ->

As for the detrimental bit, re-read what I said about employee-like clauses. For one example, if you are trying to set up a contract for services, you really don't want individuals named in the contract, but if the agency doesn't do so, how valid are their efforts to ascertain the ID of the individual in question. And once you are individually named in the contract, it could be held to be a contract of service and hence inside IR35.

Similarly, guranteed payment terms means you cannot make a loss on the contract, hence it cannot be a commercial contract for services since there is no risk involved. And so on and so on...

I can't agree with this at all, and neither do some of the other accountants who post on these matters.

A named individual on the contract is fine provided that rights of substitution are clearly stated in the contract and the limited company name is clear on the Works Schedule alongside it. Better that it is not, but if it is, that doesn't mean the contract is inside iR35.

Of course you can make a loss of the contract. No MOO means that the contract can be terminated at any time long before the contract length ends. There's also no guarantee that you will paid for regular full time work even for the duration of the contract either. This means that a loss if very possible and the risks are there. Also, the inclusion of substandard work being done on your own time free of charge will also demonstrate risk and loss.

Where are you getting this info from Malvolio?

[malvolio]

Where are you getting this info from Malvolio?

I'm making it all up, of course...

The point remains, it is not the agency's decision whether you opt out or not, it can only be yours.

Secondly, the Agency Regs were never intended to apply to professional freelance workers, but to agency temps and other flexible staff who are rather more at risk than us; but as usual for this incompetent tulipheap of a governement they were so badly drafted as to drag us into their scope. Hence the need for the opt out option for those that wanted the regs in their entirety not to apply to their contract: that group is mainly those who are running genuine one-man band businesses who do not want or need to be beholden to the agency in any way. However, other people - who I wouldn't dream of labelling "temporary employees" - believe there is a benefit to them.

If you think they add value then fine, opt in. Just be aware of the downside.