Contractual Term: "Status Bonus"

[dundeedude]

Hello again.

I am in the process of negotiating an opt-out contract with an agency, and my lawyer has questioned the meaning of this term:

"Charge rates: £XXX.XX per professional day of which 5% is in respect of the Status Bonus

Status Bonus: The amount we will pay, on the condition that: (a) The Representative utilised in the provision of Services is carrying on the business undertaking of the Supplier and (b) the Hirer is the client or customer of the Supplier in relation to the Services"

The agency have stated this is a new term, which can help with IR35 protection. [Note: I am aware the contractual writing is only a small part of being outside IR35.]

My IR35 folk are miffed by the term, and say it is almost meaningless.

Has anybody had such a thing in their contract before, or understands the purpose of it? I can't see the purpose, and don't believe it to be necessary for any party involved.

Thanks.

Note - Agent's response added here:

Status Bonus is a new addition to reflect the fact that The Agency has an agreement with your PSC to provide your specialist services to clients and customers, and as confirmation that you hold the position of Director. It's sum included in your pay rate to account for the fact that you own a genuine business, are taking full responsibility for the work completed and have obligations towards your clients receiving services. It is a sum to account for the financial risk you are accepting as an independent contractor and the fact that you are not seeking any kind of employment rights. This should further evidence the position that the client is your client under a b2b arrangement should you maintain that you are operating outside IR35.

[malvolio]

Hello again.

I am in the process of negotiating an opt-out contract with an agency, and my lawyer has questioned the meaning of this term:

"Charge rates: £XXX.XX per professional day of which 5% is in respect of the Status Bonus

Status Bonus: The amount we will pay, on the condition that: (a) The Representative utilised in the provision of Services is carrying on the business undertaking of the Supplier and (b) the Hirer is the client or customer of the Supplier in relation to the Services"

The agency have stated this is a new term, which can help with IR35 protection. [Note: I am aware the contractual writing is only a small part of being outside IR35.]

My IR35 folk are miffed by the term, and say it is almost meaningless.

Has anybody had such a thing in their contract before, or understands the purpose of it? I can't see the purpose, and don't believe it to be necessary for any party involved.

Thanks.

Note - Agent's response added here:

Status Bonus is a new addition to reflect the fact that The Agency has an agreement with your PSC to provide your specialist services to clients and customers, and as confirmation that you hold the position of Director. It's sum included in your pay rate to account for the fact that you own a genuine business, are taking full responsibility for the work completed and have obligations towards your clients receiving services. It is a sum to account for the financial risk you are accepting as an independent contractor and the fact that you are not seeking any kind of employment rights. This should further evidence the position that the client is your client under a b2b arrangement should you maintain that you are operating outside IR35.

I'm not sure how ensuring that you are the only person allowed to supply the serivces helps your IR35 position...

If what they are trying to say is that you get £n but any subbie you supply wll get 95% x £n, then they should say so explicitly. Wrapping up a penalty as a bonus is not exactly open and honest.

Which agency, BTW. Could do with a laff...

[LisaContractorUmbrella]

I would say that the explanation is completely meaningless but I would think that they are trying to protect themselves against equal pay claims under the AWR

[cojak]

Who are your IR35 folk?

I would expect them to negotiate this out of the contract.

[dundeedude]

Have used B&C for IR35 review...

I just dislike the word 'bonus'.

Agency I will not disclose, as I have seen a friend's previous contract from two months ago with them, and the terms weren't in. It's a new addition, and seems necessary to me.

[malvolio]

Have used B&C for IR35 review...

I just dislike the word 'bonus'.

Agency I will not disclose, as I have seen a friend's previous contract from two months ago with them, and the terms weren't in. It's a new addition, and seems necessary to me.

All the more reason to know who they are then. How else can we cut off such nonsense before it starts?

And I think you're doing this on the wrong boards...

[dundeedude]

All the more reason to know who they are then. How else can we cut off such nonsense before it starts?

And I think you're doing this on the wrong boards...

I felt it was a Legal issue. Wrong sub-board or wrong board entirely?

RZ Group: Google seems to state their page as 'Malware Warning', so the intermediary page for now that you can accept/deny is:

Malware Warning

[dundeedude]

Who are your IR35 folk?

I would expect them to negotiate this out of the contract.

I haven't subscribed to the Negotiation Service, as the rest of the contract is relatively sound :-)

[malvolio]

I felt it was a Legal issue. Wrong sub-board or wrong board entirely?

I'm only thinking you might help having this same debate on a site where the people reading it can actually do something about it...

RZ Group: Google seems to state their page as 'Malware Warning', so the intermediary page for now that you can accept/deny is:

Malware Warning

Noted...

[BolshieBastard]

Hello again.

I am in the process of negotiating an opt-out contract with an agency, and my lawyer has questioned the meaning of this term:

"Charge rates: £XXX.XX per professional day of which 5% is in respect of the Status Bonus

Status Bonus: The amount we will pay, on the condition that: (a) The Representative utilised in the provision of Services is carrying on the business undertaking of the Supplier and (b) the Hirer is the client or customer of the Supplier in relation to the Services"

The agency have stated this is a new term, which can help with IR35 protection. [Note: I am aware the contractual writing is only a small part of being outside IR35.]

My IR35 folk are miffed by the term, and say it is almost meaningless.

Has anybody had such a thing in their contract before, or understands the purpose of it? I can't see the purpose, and don't believe it to be necessary for any party involved.

Thanks.

Note - Agent's response added here:

Status Bonus is a new addition to reflect the fact that The Agency has an agreement with your PSC to provide your specialist services to clients and customers, and as confirmation that you hold the position of Director. It's sum included in your pay rate to account for the fact that you own a genuine business, are taking full responsibility for the work completed and have obligations towards your clients receiving services. It is a sum to account for the financial risk you are accepting as an independent contractor and the fact that you are not seeking any kind of employment rights. This should further evidence the position that the client is your client under a b2b arrangement should you maintain that you are operating outside IR35.

In the 13 years I've been contracting, I've only ever come across part of a rate being held back as a bonus until project completion, once. And that was for a Test Manager pre IR35 days.

I dont think it has anything to do with IR35. Its just a way to 'encourage' you to last the contract and not jump to another one midway through.

Personally, I wouldnt accept any contract that had a termination 'bonus.' There was someone in another thread recently who'd been binned off days before the end of the project so no 'bonus' surprise, surprise!