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Views on failed clauses

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    Views on failed clauses

    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.

    #2
    Originally posted by FiveTimes View Post
    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.
    Up to you. I would walk, but I'd likely be able to get a contract quite quickly. If I couldn't I'd be tempted to take it just to tied me over, obviously you'd be inside IR35.

    Also all agencies will tell you they're contracts and verified etc, but they have generally amended them

    Comment


      #3
      You'll be inside IR35. If it is a good contract otherwise, it may be worth it anyway. Certainly better than being on the bench. If it is only 6 months or less, you can pay your salary for the year and a nice pension contribution out of this contract's proceeds, and dividends out of the next one.

      Comment


        #4
        Originally posted by VillageContractor View Post
        Up to you. I would walk, but I'd likely be able to get a contract quite quickly. If I couldn't I'd be tempted to take it just to tied me over, obviously you'd be inside IR35.

        Also all agencies will tell you they're contracts and verified etc, but they have generally amended them
        Did QDOS do the review? IIRC they will negotiate directly with the client.

        IMO the RoS clauses might be hard to stomach for the client, but the MoO / holiday clauses should be simple enough, and that should be enough to pass (working practices dependent etc.)

        Comment


          #5
          The fact that it is verified and legal does not make it IR35 compliant.

          Explain that it places you firmly inside IR35 and that they must either change their clauses or their day rate.
          The greatest trick the devil ever pulled was convincing the world that he didn't exist

          Comment


            #6
            Originally posted by Old Greg View Post
            Did QDOS do the review? IIRC they will negotiate directly with the client.

            IMO the RoS clauses might be hard to stomach for the client, but the MoO / holiday clauses should be simple enough, and that should be enough to pass (working practices dependent etc.)
            Qdos did do the review. I'll see if they will negotiate the clauses.

            Comment


              #7
              Originally posted by FiveTimes View Post
              I'm not comfortable starting the contract with a BIG FAIL under contract review, but tempted to walk away.
              Well what's the point of having it reviewed if you are still considering taking it? Might as well have saved the money on the review and just got on with it.

              If it's got a big fail on it you drop it like the pile of hot stinking crap it is and move on. That's why you had it reviewed surely?
              'CUK forum personality of 2011 - Winner - Yes really!!!!

              Comment


                #8
                Originally posted by northernladuk View Post
                Well what's the point of having it reviewed if you are still considering taking it? Might as well have saved the money on the review and just got on with it.

                If it's got a big fail on it you drop it like the pile of hot stinking crap it is and move on. That's why you had it reviewed surely?
                What does "just getting on with it" entail in advance of a review?

                Comment


                  #9
                  Originally posted by northernladuk View Post
                  Well what's the point of having it reviewed if you are still considering taking it? Might as well have saved the money on the review and just got on with it.

                  If it's got a big fail on it you drop it like the pile of hot stinking crap it is and move on. That's why you had it reviewed surely?
                  Not quite. QDOS highlight all things that cause a fail but some are more significant than others. I find that you have to phone them to find out what they really dislike and see what they want fixed and how...

                  In one case the agency's changes came immediately (and I took the contract) in another they referred the changes to their lawyers and I walked away...
                  merely at clientco for the entertainment

                  Comment


                    #10
                    Originally posted by eek View Post
                    Not quite. QDOS highlight all things that cause a fail but some are more significant than others. I find that you have to phone them to find out what they really dislike and see what they want fixed and how...

                    In one case the agency's changes came immediately (and I took the contract) in another they referred the changes to their lawyers and I walked away...
                    Indeed but was taking the context given by the OP that it's a BIG FAT fail, the consultancy won't change it yet the OP is only 'considering'not taking it. Yes he should get QDOS to negotiate but if they consultancy won't change his got to leave it surely?
                    'CUK forum personality of 2011 - Winner - Yes really!!!!

                    Comment

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