Use of MOO in notice period and IR35

[tractor]

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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 plus side though is that in this instance, there can be no mutuality.

[Zero Liability]

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.

See when I've asked an Accountax contract reviewer about the client's right to instantly terminate contractors they don't like, something they have exercised routinely with no prejudice as to how long they've been working with the client, he said it is a strong pointer towards a lack MOO during the
contract. What TCP said seems to indicate
there's disagreement on whether what primarily matters is MOO between contracts, such that it wouldn't encompass notice periods if it's between rather than during.

[northernladuk]

Here is a pretty good article on what MoO is and what it isn't.

IR35: Mutuality of Obligation: what it is and what it is not :: Contractor UK

Outside of the legal profession, the phrase "absence of Mutuality of Obligation" is now often used to mean something like "the absence of any obligation to provide and do further work when the current (relatively short term) piece of work which the worker is obliged to complete has come to an end" and to avoid confusion with terminology I will refer to contracts which lack such further obligations as "one off contracts".

A slightly shorter and not so heavy article also mentions this..

http://www.contractoruk.com/ir35/mut...bligation.html

As a self-employed Contractor there is no obligation to receive additional work and payment after the original Contract ends. There is no obligation of the Client to provide future work for the Contractor. Alternatively, where the Contractor is working regularly at the same Client either on new contracts or on a "rolling contract", this can be a pointer used by the Revenue towards employment.

The bottom line is questionable of course.

There are some interesting comments on other sites that there has to be an obligation between two parties for there to be a contract in place so whilst you are in contract

http://www.hmrc.gov.uk/manuals/esmmanual/esm0543.htm

The basic requirements as to the mutual obligations necessary to determine whether there is a contract in existence at all are:
•that the engager must be obliged to pay a wage or other remuneration, and
•that the worker must be obliged to provide his or her own work or skill.

These basic requirements could be present in either a contract of service or a contract for services and, on their own, will not determine the nature of a contract.

Wouldn't that also point to the fact that when you are in contract there is an obligation so can't use lack of MoO just to not bother doing any work.

[TheCyclingProgrammer]

I think the key issue here is, as tractor pointed out, that whether MOO is something thats only relevant between contracts, within a contract or a bit of both isn't something that's been tested that heavily in the context of an IR35 investigation.

All that can be said with any certainty is that a lack of MOO means there cannot be a contract of services (employment) however there being the irreducible minimum MOO is only enough to say that there can be a contract of services. Its not an indication itself that there is an employee/employer relationship, just that there is a sufficient degree of MOO for there to potentially be one.

Again, for this reason, I think you are better off focussing on D&C and trying to ensure you have a genuine unfettered RoS clause. You can try and cover your bases with the MOO argument by making it clear that the client is not obliged to offer you any new work and that YourCo is not obliged to accept any new work. My MSA (PCG template) covers this quite well and I also have a further clause in my schedules that states that the client is not obliged to give me work on any given day either and that they are well within their rights to tell me not to do any work (with me subsequently not getting paid) which I think is helpful - in other words, if the project ends or is put on hold or there simply isn't any work to do thats within the scope of my contract, then I don't have anything to do. Both positive in my eyes, but I don't consider either to be a silver bullet.

What I don't like is trying to use the idea of MOO as an excuse for messing around clients and trying to get out of contractual obligations. If you don't like having a notice period, then you should negotiate not having one in the first place.

[OrangeSquash]

Thanks everyone for your responses. Some interesting points - just goes to show how many different ways there are of interpreting things!