client wants my subcontractor to be director of my company??

[Goldengirl]

HI guys,

I am currently working on a contract for a global consultancy, which has outsourced all their HR stuff to an external agency.
So, I personally have been vetted, personally have signed a workorder, and my company has signed a contract with them.
(well, actually, technically I haven´t signed it yet, because they didn´t want to pay any time reported, which was worked longer than 4 weeks ago - which their own processes often enough make impossible to report in time etc etc.. different matter, but noone seems to have noticed over there since last June that I haven´t physically signed it yet - I had sent my version with correction suggestions and noone has ever come back to me..

Now, I do need an old colleague of mine to take over some part of the work, as I can´t do that and he´s brilliant. He´s got his own company, and would be subcontracting through me/my company.
The consultancy managers totally support this, as they see the value and don´t have comparable resources in-house.

The external HR agency now wants proof of this guy being a director/secretary of MY company!
SInce neither he nor me plan to do this, I asked them to simply set him up as a consultant to my company, but I´m afraid they´ll come back and say "not possible, he needs to be a director" (knowing their ridiculous "standards" and procedures sometimes)

Has any one of you ever come across such a request and/or scenario?
If so, how did you react?

Thanks in advance for sharing your experiences!!

[AnthonyQuinn]

I have come across this. Cant imagine why this is required. Maybe they want to ensure that everyone working on site has a big stake to make sure that things go smoothly.

Be that may, this is a ridiculous expectation. Please stand firm as I have done in the past and explain why the request is ridiculous. Your original contract would say something about replacement with agreement of the client. point out that this clause says nothing about the replacements being directors and its ENTIRELY your company's prerogative to appoint directors and not the agents.

[tractor]

.....

HI guys,

I am currently working on a contract for a global consultancy, which has outsourced all their HR stuff to an external agency.
So, I personally have been vetted, personally have signed a workorder, and my company has signed a contract with them.
(well, actually, technically I haven´t signed it yet, because they didn´t want to pay any time reported, which was worked longer than 4 weeks ago - which their own processes often enough make impossible to report in time etc etc.. different matter, but noone seems to have noticed over there since last June that I haven´t physically signed it yet - I had sent my version with correction suggestions and noone has ever come back to me..

Now, I do need an old colleague of mine to take over some part of the work, as I can´t do that and he´s brilliant. He´s got his own company, and would be subcontracting through me/my company.
The consultancy managers totally support this, as they see the value and don´t have comparable resources in-house.

The external HR agency now wants proof of this guy being a director/secretary of MY company!
SInce neither he nor me plan to do this, I asked them to simply set him up as a consultant to my company, but I´m afraid they´ll come back and say "not possible, he needs to be a director" (knowing their ridiculous "standards" and procedures sometimes)

Has any one of you ever come across such a request and/or scenario?
If so, how did you react?

Thanks in advance for sharing your experiences!!

TBH your scenario sounds like a legal minefield and an operational nightmare.

Before considering subbies, I would get myself and my company on a proper legal footing with agreed, signed contracts. Then I would worry about fixing the obviously broken payment processes so that I was not out of pocket.

Once you are in a proper commercial relationship, you can then worry about subbies. You may find that a proper agreed contract facilitates the use of subbies if you include that element in the negotations that you obviously badly need to engage in

[tractor]

...

I have come across this. Cant imagine why this is required. Maybe they want to ensure that everyone working on site has a big stake to make sure that things go smoothly.

Be that may, this is a ridiculous expectation. Please stand firm as I have done in the past and explain why the request is ridiculous. Your original contract would say something about replacement with agreement of the client. point out that this clause says nothing about the replacements being directors and its ENTIRELY your company's prerogative to appoint directors and not the agents.

It sounds more to me like it's a 'legal' requirement their lawyers insist upon in order to be compliant with the new 'self employment' loophole legislation included in last year's ITEPA. Several agencies have specified that requirement in contracts that I have been in negotiation over.

Forget the fact that HR and legal professionals don't even realise that the loophole cannot apply to Limited Companies and Companies that are sub (sub, sub, sub) contracting, only to those genuinely self employed by dint of the only legal definition of the term i.e. Sch D. Agencies and HR don't really care about the legalities because there is so little precedent around this kind of gpvernment fudge. They just do as their risk averse leeches Lawyers tell them.

[northernladuk]

What's your contract say.. Oh.. NVM..

[Goldengirl]

Many thanks for your prompt replies, guys!
Good to hear at least that I`m not the only one coming up against some ridiculous demands.

@Tractor: I suppose by "minefield" you mean the fact that my contract hasn´t actually been signed since June 2014?
I guess you´re right, however, they´ve been paying me since under this contract (with some hiccups, but not due to contract, but other procedural issues).
After seeking legal advice on the "we will not pay you if...." (I had another thread on this back in June 14, where I quoted the solicitor´s advice), I struck all the relevant passages and wrote back to them: I will sign the contract in this format.
Their payment process isnt really broken as such, their contractual demands were the sticking point.

Thanks for pointing out the ITEPA requirements, I didn´t know about that (hardly ever deal with UK companies, most of my clients are in EU or US).
You´re most likely right that this is the reason. SO, I´ll arm myself with relevant info and , yes, will stand firm

THANKS - will keep you updated on further developments!

[Goldengirl]

OH, just realised that I actually did sign the contract -> I had taken out the offending bits and signed that!
So, I do have a signed contract!
They just never came back to me to complain..
I thought I just sent them the amended version with a note in the email, but I guess I got daring at the last minute.

Anyway, here is what the contract says:

"1 The provisions of these Responsible Procurement Principles set forth the expectations of CONSULTANCY XXX with respect to all suppliers with whom CONSULTANCY XXX does business.

These principles apply to CONSULTANCY XXX’s direct suppliers (“ Suppliers”) and any subsidiary, affiliate or other entities involved in the provision of services or products to CONSULTANCY XXX, including Supplier’s subcontractors, suppliers and agents as well as their employees (collectively, “ Indirect Suppliers”) .

CONSULTANCY XXX expects its Suppliers to work with their Indirect Suppliers to ensure that they strive to meet these principles – or an equivalent set of principles, aligned to meet or exceed the minimum standards set forth herein.

1.2 CONSULTANCY XXX expects its Suppliers to maintain and keep current, appropriate management policies, procedures and controls whose scope aligns to and supports the content of these Responsible Procurement Principles. All principles are of individual importance and will be weighted equally in determining whether to engage Supplier to provide product and/or services on an ongoing basis. "

It doesn´t even specify that resources to be engaged on projects need to be signed off (which is the case anyway), it just assumes subcontractors/employees etc..

That should settle it?

Cheers