Outside IR35 Indemnity clause in contract

[spritz]

Hello
I had received an offer for an outside IR35 role and while reviewing their contract I noticed that they had some really interesting IR35 related clauses as below:

• If any person should seek to establish any liability or obligation upon Agency or upon Client on the grounds that Representative is an employee or worker (or should be treated as such for the purpose of employment rights, benefits and/or taxation) of Agency or of Client, Contractor agrees to indemnify and hold harmless Agency and/or Client and to keep Agency and/or Client, as the case may be, indemnified in respect of any such liability or obligation and any related (without limitation) claims, costs, expenses, legal expenses, proceedings, settlements or other losses, damage or injury to any party resulting in negligent, reckless or wilful acts, errors, or omissions of the Representative which Agency or Client incur.

• Contractor agrees to indemnify and hold harmless Agency and Client in full from and against any and all, actions, claims, demands, proceedings, judgements, damages, losses (including indirect or consequential), liabilities, costs, charges and expenses (including legal fees), settlements, fines, interest and penalties of whatever nature and in whatever jurisdiction, which may be instituted, made or alleged against, or suffered or incurred by Agency or by Client, arising from or in connection with :

-any claim or allegation that Representative is an employee of Agency or of Client;

-any claim or demand, howsoever arising, against Agency or Client for income tax and/or employee's and/or employer's National insurance contributions relating to any Representative where Off-Payroll is outside scope or not applied to an Assignment ; or

-any claim against Agency or Client arising out of any act or omission of any Representative including (without limitation) any act of discrimination.

I spoke to my insurer to see if their policies would cover this and they came back negative. The agency said these are pretty standard clauses and they were not going to amend or remove these. It sounds way too risky to me and I am considering looking elsewhere or going via an umbrella just to be safe and say good bye to all the money that could have been made. Did anyone face this and how did you go about it?

[vwdan]

I had a similar clause a few years back - I just outright refused because, like you, my insurer confirmed they would not pay out.

I spoke to their compliance team who agreed that it was a clause which was impossible for me indemnify against, and removed it.

[SueEllen]

If you really want the contract then get your contract reviewed professionally rather than do it yourself.

Then you can tell the agency what the reviewer said, giving them the name of the reviewer, and then request that the agency remove the clause.

[northernladuk]

It's now the responsibility of whoever made the determination so no way a clause like that is going to hold any water.

If you want to persue this I'd get QDOS or the like to do a proper review of the contract and when they give you their professional opinion forward that to the agent. Point out that where they may think it's 'standard' a professional considers it impossible and it would be in the agents best interest to revisit it.

[ComplianceLady]

Firstly - it's not standard. It's not in any of the industry body terms or the usual contracts for recruitment places templates.

I think it would hold water - you can agree to indemnify someone for something that is their responsibility and usually insure against it.

Kingsbridge has a policy that will cover any party against whom a claim is made - my preferred approach would be no indemnity but take out the policy and that way whoever HMRC pursues is covered. The Agency should accept that as a viable alternative. The indemnity in the current form should be refused.

[edison]

It's now the responsibility of whoever made the determination so no way a clause like that is going to hold any water.

If you want to persue this I'd get QDOS or the like to do a proper review of the contract and when they give you their professional opinion forward that to the agent. Point out that where they may think it's 'standard' a professional considers it impossible and it would be in the agents best interest to revisit it.

Exactly this.

I once had a contract review done by QDOS that identified six IR35 unfriendly clauses. The agency came back with the standard "these can't be changed" response but the key here was to ask the person at QDOS to speak to the agency directly. They negotiated the clauses on my behalf and everything was amended or removed as per the original QDOS assessment.

I don't know if QDOS still offer this as part of their standard IR35 review as I've not used it since 2018.

[velcro]

I asked QDOS about this a couple of months ago and was advised not to sign one of these. (It wasn't a formal query to them, more of a hypothetical.) They agreed that these clauses would likely not be enforceable, however it is still unknown as there's been no legal precedent set yet. That will be interesting...

[jamesbrown]

Not standard terms, avoid. It may or may not be enforceable. Either way, the supply chain is taking a risk, because they are responsible and liable in the first instance and there is no guarantee that YourCo is still around when any liability is proven - I am obviously assuming here that "Contractor" is YourCo and not you personally because you cite this contract as being outside. Nevertheless, you are also taking a risk when signing this and you should assume that, in principle, the clauses will hold.

[Snooky]

I'd walk away if they're completely unwilling to change that clause, because it shows they have no confidence that the role is actually outside IR35, so it probably isn't really. But I'd also very politely let the client know why I can't take their very generous offer any further on this occasion, even though I'd really have liked to work with them. Perhaps it'll make no difference at all, but perhaps if enough people refuse offers and give this type of contractual nonsense as their reason, the penny might drop.