Inside IR35 - should end client pay unconditionally for contractor being available?

[chicane]

A semi-hypothetical question - all opinions (informed and otherwise) welcome.

Imagine a contractor starts an inside IR35 contract working through an umbrella, but is initially unable to perform their duties due to an issue that originates with the client, and needs to be resolved by the client. Given that the contractor is a "deemed employee", would this place any obligation on the end client to pay for that contractor's time whilst this issue is being resolved, despite the fact that the contractor is not providing services or value during this period?

I'd say that in an outside IR35 situation, it would be natural and expected for the contractor to take it on the chin, and take an unpaid step back until the end client is able to resolve the issue. But would the fact that a contract is inside IR35 change things somewhat?

[northernladuk]

Need to check your contract. I expect it will still say you are paid per day and they can still let you go. You are still a temp resource to them regardless of your tax situation. "deemed employee" is misleading you. You have none of the benefits of an employee. You are still a contracted resource just with a different tax situation.

[velcro]

Charge it

[chicane]

Need to check your contract. I expect it will still say you are paid per day and they can still let you go.

Thanks for your response.

The question isn't so much about whether the client can let the contractor go - it's more about whether the client would be expected to pay for the contractor while the situation preventing the contractor from delivering is being resolved.

I suppose it all boils down to the fine print of the umbrella employment contract as you've suggested, despite the fact that in most cases the umbrella contract will be a generic one not tailored towards the specifics of the situation.

[chicane]

Charge it

Thanks - any further thoughts on why you'd consider this to be the right thing to do?

[Paralytic]

Thanks - any further thoughts on why you'd consider this to be the right thing to do?

I'd say this is pretty simple - if they client is willing to sign off the timesheet for that day, then do it. But, i'd also be looking for some productive activity to do for that day.

As for an obligation for the client to do so, i doubt it (but will depend on the specific contract).

[velcro]

You've made yourself available to the end client from the agreed contract start date. Your time is committed, and as long as the delay is within the responsibility of the client, you should charge (unless there is anything to the contrary in the contract, obviously).
Being Inside IR35 there is a level of MOO, which this would point to. If they don't want to pay then they should have taken on an Outside contractor.

IANAL

[jamesbrown]

I don't think IR35 (or the Off-Payroll Working Rules, aka Chapter 10) has any bearing on this, since it's tax legislation (ITEPA), not about employment rights (in case that's what you were wondering), and umbrellas are out of scope anyway (since PAYE is being applied). It's really a contractual issue. Your umbrella contract (of employment) will state the circumstances in which you get paid.

[chicane]

Thanks for your responses - interesting reading.

I don't think IR35 (or the Off-Payroll Working Rules, aka Chapter 10) has any bearing on this, since it's tax legislation (ITEPA), not about employment rights (in case that's what you were wondering), and umbrellas are out of scope anyway (since PAYE is being applied). It's really a contractual issue. Your umbrella contract (of employment) will state the circumstances in which you get paid.

Sadly I think you are correct from a technical standpoint. Grossly unfair, but then that applies to the entire legislation.

You've made yourself available to the end client from the agreed contract start date. Your time is committed, and as long as the delay is within the responsibility of the client, you should charge (unless there is anything to the contrary in the contract, obviously).
Being Inside IR35 there is a level of MOO, which this would point to. If they don't want to pay then they should have taken on an Outside contractor.

This would certainly be a reasonable conclusion to jump to, wouldn't it! If outside IR35 has to mean the absence of MOO, then inside IR35 must mean the presence of MOO.

I'd say this is pretty simple - if they client is willing to sign off the timesheet for that day, then do it. But, i'd also be looking for some productive activity to do for that day.

As for an obligation for the client to do so, i doubt it (but will depend on the specific contract).

The interesting thing is that the agency also has skin in the game and they're obviously interested in getting their cut of the day rate. In practice I imagine this would come down to a discussion between the contractor, agency and end client to find an arrangement that works for everybody involved.

[northernladuk]

This would certainly be a reasonable conclusion to jump to, wouldn't it! If outside IR35 has to mean the absence of MOO, then inside IR35 must mean the presence of MOO.

No it wouldn't. There could be other factors that put it inside. There could still be a ascence of MoO but no RoS etc.

The interesting thing is that the agency also has skin in the game and they're obviously interested in getting their cut of the day rate. In practice I imagine this would come down to a discussion between the contractor, agency and end client to find an arrangement that works for everybody involved.

Here's another example. You'll be expected no to work during xmas and bank hols as the client offices are closed. Exactly the same thing. You can't work because the client is off so you don't get paid. That's in your contract so yes, they can roll you off as they need to.