Contract without notice period on contractors side.

[willendure]

Twice I have seen this now - a contract without a notice period stated for the contractors side. Never seen it before in 20 years, there has always been a 2 or 4 week notice period that the contractor can give.

My last contract, I actually just signed up without worrying too much about it. I had the contract professionally reviewed at one point and their opinion was that no notice period could imply "mutuality of obligation", since the contractor is expecting to be given work to do for the whole period. Towards the end of that contract, I asked for the contract to be altered to add a notice period. All worked out ok in the end regardless, had a great relationship with that client and loved working with them.

No I have a new one, again no notice period. Client is of the opinion that this is better from an outside IR35 perspective, as its a contract to deliver a statement of work between 2 businesses. I would have assumed that to be correct were it not for the contract review raising the question of MOO above.

I am also conscious of the risk if I am somehow unable to complete the contract - if for some reason I have to abandon it seems like my Ltd would then be in breach of an agreement and if the client doesn't like that it could get messy.

Would love to hear your opinions - thanks!

[Ketto]

I’d personally always want a notice period if the contract was four months or more in duration. We have all had terrible clients so i’d always want the ejector seat option to be available to be used if needed. I quit terrible contracts much more frequently than i did when i was younger.

Also i’d see having a notice period as a positive for outside of IR35 status, shorter the better.

[malvolio]

This has ben asked many times.

The problem is that as a contractor you do not have a notice period anyway; if the client stops giving you work for any reason then you are effectively out of a job.

If you want to bail out early and don't have a written notice period then you can always negotiate an exit. No client want to keep a contractor for fun if they are set on leaving.

As for IR35, an employee has to have a notice period by law. Not having one is a pointer (but no more than a pointer) away from employment.

So in reality, contractors don't really need notice periods, and in some edge cases they can be damaging.

[ladymuck]

I've seen this on FTC's where the expectation is that the contractor will serve the full 12 months (or whatever duration). I've never taken one so don't know how it might work in practice.

I think I'd prefer to see a termination clause in a B2B contract, than a notice period. There should be a way for the contractor to terminate the contract before its end date. This doesn't need to define a notice period as such but should provide a mechanism for both parties to end the agreement.

[Ketto]

I find clients often go completely apoplectic even if you are invoking a mutually agreed termination clause.

[davetza]

I posed this question to ChatGPT and as I think it adds to the conversation I am posting it's response

Your post raises some important points about contract structure and IR35 considerations. Here are a few thoughts:

1. Mutuality of Obligation (MOO) Risk: The contract review flagging MOO as a concern is interesting. Typically, for an engagement to be "outside IR35", there should be no ongoing obligation for the client to provide work, and no expectation on the contractor's side to accept it. A lack of a contractor-side notice period could arguably suggest a level of commitment beyond a standard "contract for services", which might not be ideal from an IR35 perspective.
2. Statement of Work (SOW) Approach: Your new client seems to be positioning the contract as a B2B engagement based on deliverables rather than an ongoing working relationship. If the contract clearly defines project milestones and deliverables rather than simply billing for time, that could strengthen the outside IR35 position. However, if the contract and day-to-day work still resemble traditional employment (e.g., fixed hours, management oversight), HMRC might still challenge it.
3. Risk of No Notice Period: Your concern about being unable to complete the contract is valid. If something unforeseen happens (e.g., illness, personal emergency), your Ltd could be in breach without a contractual exit clause. A well-drafted SOW should include provisions for termination due to unforeseen circumstances, so it might be worth negotiating a reasonable notice period or at least a clause outlining exit conditions.
4. Practical Considerations: While the legal side is important, the reality of contract work means relationships matter. Since your last experience worked out well despite the lack of a notice period, you might be fine again—especially if you maintain open communication with the client. However, it's always safer to ensure your contract protects your business in case things don’t go smoothly.

It might be worth discussing this with a contract specialist, particularly one with IR35 expertise, to clarify any risks specific to your situation. Would be interesting to hear what others in the contracting space think—has anyone else seen this trend?

[willendure]

I think I'd prefer to see a termination clause in a B2B contract, than a notice period. There should be a way for the contractor to terminate the contract before its end date. This doesn't need to define a notice period as such but should provide a mechanism for both parties to end the agreement.

For clarification - there is a termination clause in the contract. But no sub-clause that allows the contractor to terminate with X days notice. All the sub-clauses describe the reasons the client may terminate, including one for issuing a termination without one of the above reasons by giving 7 days notice.

[malvolio]

I posed this question to ChatGPT and as I think it adds to the conversation I am posting it's response

Your post raises some important points about contract structure and IR35 considerations. Here are a few thoughts:

1. Mutuality of Obligation (MOO) Risk: The contract review flagging MOO as a concern is interesting. Typically, for an engagement to be "outside IR35", there should be no ongoing obligation for the client to provide work, and no expectation on the contractor's side to accept it. A lack of a contractor-side notice period could arguably suggest a level of commitment beyond a standard "contract for services", which might not be ideal from an IR35 perspective.
2. Statement of Work (SOW) Approach: Your new client seems to be positioning the contract as a B2B engagement based on deliverables rather than an ongoing working relationship. If the contract clearly defines project milestones and deliverables rather than simply billing for time, that could strengthen the outside IR35 position. However, if the contract and day-to-day work still resemble traditional employment (e.g., fixed hours, management oversight), HMRC might still challenge it.
3. Risk of No Notice Period: Your concern about being unable to complete the contract is valid. If something unforeseen happens (e.g., illness, personal emergency), your Ltd could be in breach without a contractual exit clause. A well-drafted SOW should include provisions for termination due to unforeseen circumstances, so it might be worth negotiating a reasonable notice period or at least a clause outlining exit conditions.
4. Practical Considerations: While the legal side is important, the reality of contract work means relationships matter. Since your last experience worked out well despite the lack of a notice period, you might be fine again—especially if you maintain open communication with the client. However, it's always safer to ensure your contract protects your business in case things don’t go smoothly.

It might be worth discussing this with a contract specialist, particularly one with IR35 expertise, to clarify any risks specific to your situation. Would be interesting to hear what others in the contracting space think—has anyone else seen this trend?

I think the the view is out of date as regards MOO, it has been challenged successfully by HMRC in recent years. Plus recent cases have effectively made the contract and the reality equally important when determining status.

And I did say that in the absence of an agreed notice period, then negotiation is the route to take. Now the OP has said they have an exit clause rather than a notice period, I don't think they actually have a problem.

[willendure]

This has ben asked many times.

The problem is that as a contractor you do not have a notice period anyway; if the client stops giving you work for any reason then you are effectively out of a job.

If you want to bail out early and don't have a written notice period then you can always negotiate an exit. No client want to keep a contractor for fun if they are set on leaving.

As for IR35, an employee has to have a notice period by law. Not having one is a pointer (but no more than a pointer) away from employment.

So in reality, contractors don't really need notice periods, and in some edge cases they can be damaging.

Yeah - that makes sense. Its hard to know if having a notice period is a pointer away from or towards employment status, or even if it is a strong enough pointer in either direction to make any kind of difference at all!

[willendure]

And I did say that in the absence of an agreed notice period, then negotiation is the route to take. Now the OP has said they have an exit clause rather than a notice period, I don't think they actually have a problem.

I see - the exit clause defeats MOO even though it is entirely one sided? That is, there may be obligation, but its not mutual?