I have just sent off a draft contract away for review and it failed with the following :
Clause X.X – This clause states that you will have a ‘holiday allowance’. As a contractor you should not have
a set amount of days that you are allowed to have off because as a contractor you should be able to take as
much time off as you wish, but of course you would not be paid for this time. As well as this, this clauses
makes reference to substitution but in a negative way, therefore this entire clause should be removed as its
entirety is negative.
Clauses X.X.X - The right to provide a substitute is one of the most important tests in determining IR35
status. It is therefore crucial there is a strong clause within your contract and that your right to provide a
substitute is a genuine one, i.e., recognised by your end client. Not having a genuine right could significantly
weaken the prospects of success in the event of an IR35 enquiry. These clauses are quite restrictive on your
right to provide a substitute and I would suggest that all three of these clauses are removed and replaced with
the following clause.
The Supplier shall provide the services using suitably qualified personnel of their own choosing. The Supplier
reserves the right to substitute any personnel, provided the Client is reasonably satisfied that the substitute
possesses the necessary skills and qualifications for the satisfactory completion of the services. The Supplier
will remain liable for the services completed by substitute personnel and will bear any costs.
Clause X.X – You should not be told how many people you can have working on a project from your limited
company as this should ultimately be up to yourself as long as the other people have the adequate skills,
experience and qualifications. Therefore this clause should also be removed from your contract. Along with
this should be the section mentioned in the schedule.
Missing from your contract is a Mutuality of Obligation clause which is one of the key points that HMRC look
into if you were ever to be investigated, therefore the following clause should be added to your contract.
The Client is under no obligation to offer further contracts or services to the Supplier nor is the Supplier under
obligation to accept such contracts or services if offered. The Supplier is not obliged to make its services
available except for the performance of its obligations under this Agreement. Both parties agree and intend
that there be no mutuality of obligations either during or following the agreement, whatsoever.
The consultancy has come back and said they wont change any of the terms as they believe it is all verified and legal.
Thoughts on the above clauses ? I'm not comfortable starting the contract with a BIG FAIL under contract review, but tempted to walk away.
Clause X.X – This clause states that you will have a ‘holiday allowance’. As a contractor you should not have
a set amount of days that you are allowed to have off because as a contractor you should be able to take as
much time off as you wish, but of course you would not be paid for this time. As well as this, this clauses
makes reference to substitution but in a negative way, therefore this entire clause should be removed as its
entirety is negative.
Clauses X.X.X - The right to provide a substitute is one of the most important tests in determining IR35
status. It is therefore crucial there is a strong clause within your contract and that your right to provide a
substitute is a genuine one, i.e., recognised by your end client. Not having a genuine right could significantly
weaken the prospects of success in the event of an IR35 enquiry. These clauses are quite restrictive on your
right to provide a substitute and I would suggest that all three of these clauses are removed and replaced with
the following clause.
The Supplier shall provide the services using suitably qualified personnel of their own choosing. The Supplier
reserves the right to substitute any personnel, provided the Client is reasonably satisfied that the substitute
possesses the necessary skills and qualifications for the satisfactory completion of the services. The Supplier
will remain liable for the services completed by substitute personnel and will bear any costs.
Clause X.X – You should not be told how many people you can have working on a project from your limited
company as this should ultimately be up to yourself as long as the other people have the adequate skills,
experience and qualifications. Therefore this clause should also be removed from your contract. Along with
this should be the section mentioned in the schedule.
Missing from your contract is a Mutuality of Obligation clause which is one of the key points that HMRC look
into if you were ever to be investigated, therefore the following clause should be added to your contract.
The Client is under no obligation to offer further contracts or services to the Supplier nor is the Supplier under
obligation to accept such contracts or services if offered. The Supplier is not obliged to make its services
available except for the performance of its obligations under this Agreement. Both parties agree and intend
that there be no mutuality of obligations either during or following the agreement, whatsoever.
The consultancy has come back and said they wont change any of the terms as they believe it is all verified and legal.
Thoughts on the above clauses ? I'm not comfortable starting the contract with a BIG FAIL under contract review, but tempted to walk away.
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