Opt-out Conduct of Employment Agencies Reg

[EggsAndBacon]

Long time lurker first time poster here. Just got my first contract through an agency and the agent is encouraging me to opt out of the regulations and has said 1) he hasn't had anyone else choose not to opt out and 2) it's better for IR35 to opt out. From reading the info on this site, it doesn't look like either of those are true.

If it comes down to it, should I not accept the contract if the agent forces me to opt-out? Has anyone let a contract go because they didn't want to opt out and an agent was making them?

[clearedforlanding]

Long time lurker first time poster here. Just got my first contract through an agency and the agent is encouraging me to opt out of the regulations and has said 1) he hasn't had anyone else choose not to opt out and 2) it's better for IR35 to opt out. From reading the info on this site, it doesn't look like either of those are true.

If it comes down to it, should I not accept the contract if the agent forces me to opt-out? Has anyone let a contract go because they didn't want to opt out and an agent was making them?

Please read the first timers guide to your right and search the forums. This question is asked all the time.

[SueEllen]

Please read the first timers guide to your right and search the forums. This question is asked all the time.

WHS with bells and whistles on it.

If you can't use the search on the site then use Google.

If you don't know how to search a forum or website using Google then google it.

(BTW the ability to use Google will help you a lot in your contracting career.)

[northernladuk]

And there's a 50 page sticky at the top of this part of the forum dedicated to exactly this.

[Contreras]

If it comes down to it, should I not accept the contract if the agent forces me to opt-out?

That's up to you.

Has anyone let a contract go because they didn't want to opt out and an agent was making them?

Not here. But then I've never dealt with an agent who didn't blink first on this issue.

[BlasterBates]

This is useful:

Conduct of employment regulations: a guide to opting in or out

However, although employment status is determined on a case-by-case basis, a limited company contractor accepting on paper that they are controlled by the client and wish to be covered by the regulations is sending a pretty negative message to HMRC about their employment status. Control by the client is a key factor in determining the employment status of a contractor, and can be part of a package of evidence that puts a contractor inside IR35.

[Contreras]

Conduct of employment regulations: a guide to opting in or out

However, although employment status is determined on a case-by-case basis, a limited company contractor accepting on paper that they are controlled by the client and wish to be covered by the regulations is sending a pretty negative message to HMRC about their employment status. Control by the client is a key factor in determining the employment status of a contractor, and can be part of a package of evidence that puts a contractor inside IR35.

Except that opting out is not a denial that you are controlled by the client.

By opting out you accept that the legislation applies and therefore that there is control (as defined by the conduct regs.). If the relationship is genuine business to business then the legislation does not apply and there is nothing to opt out of.

Really, if there was anything in this for HMRC we would have seen case law by now.

For balance, here's the view from a respected IR35 'expert' -

IR35: There was much discussion in the course of the battle over whether or not the inclusion of limited company contractors within the regulations would be an IR35 negative; if it is an IR35 negative, then in my view it will be a very minor one, but I myself believe that operating within or without the regulations will be an IR35 neutral point. Indeed, I would say the taking of a decision to avail oneself of the commercial protection of the regulations and not opt out could be argued to be an IR35 positive, since it is exercising sound management principles to take a commercial decision in the best interests of the business, for reasons other than tax.

Thus my own feeling is that any potential IR35 effects of opting out should be disregarded.

Opt-in, opt-out?Legal specialist Egos comments :: Contractor UK

[BlasterBates]

The point is if you are truly outside IR35 the conduct of employment regulations don't apply.

So what is the point ?


Either you're inside and you gain protection or you're outside and you gain no benefit. Lets say you then brought a legal case using "opt in" as your case and there is an IR35 investigation. Well the chances of both happening are so small that there probably exists no case that was tested, but would you be happy saying to a judge you sued the agency because you were controlled by the client ?

I see no harm in the opt out clause not being in your contract, but I would advise against the opt in being written in with all the implications. Actually exercising your opt in as opposed to simply not being opted out is a completely different kettle of fish. To get your money out of the agency you will have to submit evidence of being "controlled". Hence an opt in not worth very much at all, because for you to get the money out of an agency you would have to provide evidence that HMRC would need to nail you.

My advice would be agree with the agent just remove all mention of opt in and opt out., but certainly not turn down the contract on a principle that doesn't apply anyway.

[SueEllen]

Two of the main things to get in your contract covered by the regulations are:
1. An acknowledgment that you will be paid on evidence of doing the work NOT when the client pays the agency,
2. A reasonable handcuff clause

If you are opted-in these shouldn't apply but in reality as there are no higher court cases on the issue you need to ensure they are written into your contract regardless of your status.

Agents want you to opt-out because they presume it gives you less legal rights as they do not understand what it covers. For example I've had agents trying to exclude me from laws like Health and Safety before linking it to the regulations. I've had to point out that such a clause isn't legally enforceable and anyway is no way is legally linked to it.

They can put opt-in in the contract but you need to ensure all the other clauses are properly reviewed so it's only related to the areas of should apply to.

Interestingly because I tend to get lawyers to look at my contracts on a few occasions I have been given a different contract once I have said that with a couple of contentious clauses removed. (Some agents do ring the lawyer to check. )

[BlasterBates]

Sue Ellen makes a good point. Make sure the things you would like are in the contract.

I would go a step further don't rely on the employment regulations, before the agency regulations contractors got their conditions in the contract.

Make sure the conditions you would like are in the contract, that way you don't have to rely on some dubious legislation that probably won't be applicable anyway. As I said above if the agent tells you you're outside the legislation and therefore won't pay you don't want to be taking precedings by submitting written evidence you were under the control of the client. You want to point to your contract.