Use of MOO in notice period and IR35

[OrangeSquash]

If I served notice on a contract - say one month - and advised agent/clientco that myco contractor would only be available for the first two weeks (by exercising the MOO clause in the contract) - would this be a decent pointer towards being outside of IR35 for that contract?

[Bunk]

It depends. If they say "yes, that's fine" then it would probably help. If they say "no, you have to work the full notice" then you're screwed. If everything else about the contract is inside IR35, then refusing to serve the last 2 weeks of the notice period isn't going to magically fix everything.

[TheCyclingProgrammer]

The client can insist that YourCo fulfils its contractual obligations, including any notices given. You're of course welcome to not fulfil them and risk any legal repercussions (there probably won't be but its not guaranteed).

There's a lot of confusion around what MOO means and what it doesn't mean. Having the irreducible minimum MOO simply means there it is possible for there to be a contract of employment in place, it doesn't mean there *is* a contract of employment in place. Establishing the necessary level of MOO will be the first step in establishing what type of contract - if any - is in place but any challenge would then have to consider the other usual factors such as D&C and RoS.

There's also the view that MOO only really applies between contracts; IOW, is YourCo obliged to accept new work and is the client obliged to offer it, with the reasoning being that if YourCo is not obliged to accept new work at the end of a project/contract then you pass the MOO test, but that doesn't excuse YourCo from its existing contractual obligations.

Whichever way you look at it, I'm not sure simply telling the client/agent that you're not honouring your notice period is the approach I'd take. Most contracts will have a degree of MOO and your IR35 status is far more likely to be challenged on the issue of D&C or the requirement for personal service.

Also, whilst it might look good in an IR35 investigation but its not exactly going to do you or YourCo's reputation any good is it? It would be far better (and probably an even stronger IR35 argument) to tell the client/agency that whilst you won't be personally available, YourCo is more than happy to arrange a substitute. They'll probably decline and choose to end the contract early but at least you'll have offered to fulfil your contractual obligations.

[TheFaQQer]

It depends on your interpretation of lack of MOO - does that give you the right to turn down work that you are already contracted to do, or does that give you the right to turn down future work which is outside the scope of the current contract?

Some will argue the former; some the latter - but I don't think there has been a legal precedent which clarifies it. It would also depend on the exact wording of the contract as to which of these approaches it means.

Either way - I agree with Bunk.

[tractor]

...

The biggest problem with MoO is that " the issue of MOO has been used predominately in employment rights cases and not in tax cases"

The majority of cases cited by HMRC within the Employment Status Manual quote such cases and rely to a large extent on the premise that the longer you are in contract, the more likely MoO exists. This is true of both long single contract and multiple extensions of any length.

I am not sure that MoO has been tested to any level of certainty in a tax case let alone IR35 or the precedent would be all over the web. And it's not as far as I can tell.

I am of the cynical persuasion and I would suspect that HMRC is unlikely to pursue a case on this alone for two reasons;

1. they don't want clarification because they can spin it any way they like and their FUD works wonders for compliance amongst the ignorant.
2. they don't want to lose because it would be a silver bullet for us all.

I am firmly of the belief (and always was) that HMRC application of IR35 is of a compliance measure and not a revenue measure and their performance (as noted by HoL and other commentators) is abysmal where it comes to revenue from IR35.

[cojak]

WBS.

MOO for me mean that should the project for which I have been contracted gets canned, I can leave as soon as I have completed my deliverables to said project. If the client doesn't want my delivables then I'll send an email to the PM informing him that I will no longer bill against my contract and invite him to terminate my services - I'll then handover my laptop to reception as I walk out of the door.

I will, of course, meet the PM before this to let him know what I intend doing. The fact that he had pencilled me in for another project as there's lot's of work in the client, is not really my problem (I would have negotiated a new schedule had I wanted to stay, but I didn't).

[SpontaneousOrder]

Surely the only way it makes sense is if the project ends before the contract end date, then you don't turn up to work anymore unless they offer you different work and you accept it.
That's what I'm doing now - project is ending with several months of contract left. They notify me that there is no more work, then they offer me work on a different project because there is still 4 months of budget for me, already approved by the bean counters. I then accept it and get a new schedule, or I don't accept it and we terminate the contract there and then.

I'm pretty sure it can't mean that you can walk out whenever you like. If, for example, you gave notice of termination and then went on holiday, then it'd be a different thing entirely - you didn't bail on them, you just went on holiday (I.e. no lack of MoO being exercised).

[Bunk]

Surely the only way it makes sense is if the project ends before the contract end date, then you don't turn up to work anymore unless they offer you different work and you accept it.
That's what I'm doing now - project is ending with several months of contract left. They notify me that there is no more work, then they offer me work on a different project because there is still 4 months of budget for me, already approved by the bean counters. I then accept it and get a new schedule, or I don't accept it and we terminate the contract there and then.

I'm pretty sure it can't mean that you can walk out whenever you like. If, for example, you gave notice of termination and then went on holiday, then it'd be a different thing entirely - you didn't bail on them, you just went on holiday (I.e. no lack of MoO being exercised).

What upsets some people is that it's pretty lop-sided, ie the client can use it to get rid of a contractor at any time without the notice period. The difference is that they control the project, they decide whether there is work to do on it or not.

[northernladuk]

Funny we have had the same question very recently. Agree with anyone that says this isn't MoO at all. Won't do anything for IR35 at all except proving you are not being directed but in this particular case I am sure the client would have good grounds to claim breach of contract. Particularly if you are doing it as a ruse to get out of your obligation early to start a new gig. Holiday is arguable as you are still technically in contract soley with them. Doing it to cheat the notice period is clear breach.
Either way it's a pretty tulipty thing to do and both agent and client will be quite understandably pissed off.
Negotiate your way out. Don't pull stupid tricks.

[TheFaQQer]

What upsets some people is that it's pretty lop-sided, ie the client can use it to get rid of a contractor at any time without the notice period. The difference is that they control the project, they decide whether there is work to do on it or not.

The client isn't invoking the MoO clause when they do that, though - they are invoking a separate clause which says that they will only pay for days / hours worked and approved by them.

If you included a clause in the contract which said "penalty for early termination of the contract shall be £x per day left on the contract or £x per day times 28, whichever is the lower figure" then that wouldn't impact the MoO clause at all, but would mean that you get paid off for early termination.