Contractor indemnifying Agency

[peace]

Hi Friends

I will be receiving a new contract for my limited company. The terms look fine, covering the important aspects of control, substitution, obligation. There are couple of things which I didn't find very comfortable and thought to take some suggestions here..

1. Regarding liability & indemnity, it says that.
The Contractor will indemnify Agency against any actions, claims, costs, expenses, damages and liabilities Agency and/or the Client may incur:

(a) where a court, tribunal, or Government authority holds that either the Client or Agency is an employer of the Personnel;

(b) for income tax, national insurance contributions, statutory entitlements such as holiday pay and statutory sick pay and any other taxes, deductions or benefits directly or indirectly relating to the provision of services by Individuals during the Assignment ("Contractor Payments").

The indemnity in 7.2(b) will not apply where Agency and/or the Client is obliged by law to make such payment, and Agency is not lawfully permitted to claim repayment from the Contractor


Why should the contractor indemnify the agency? Is it correct ?

2. Also, the agency has the right to terminate contract without cause and for whatever reason by giving notice of varying time periods (depending on the elapsed length of contract), but the contractor doesn't have any such right.
This doesnt feel justified.

It would be great to know the group's views on them.

Thanks all..

[BrowneIssue]

Are you just quoting from my Elan grizzle of a few months ago? I walked from a really good gig because I was advised to on legal advice because of such a contract.

[SueEllen]

1. The agency is trying to ensure that you are not a employee but if you operate under a limited company/umbrella company then you can't be an employee as the contract is with your limited company/umbrella company not you as an individual so the clause is not needed. So get it removed.

2. Allowing them to terminate the contract for no good reason is unfair on your business. Get it altered.

If they refuse to then you are going to have to walk.

[BrowneIssue]

Alternative response

I'll have a go at a less negative response now.

It reads as though the first part is saying "and if you do fall under IR35, YOU pay the tax, not US". So if they get an employer's NI bill, they'll push it your way.

The second part about termination seems to depend upon individual's views. Many say you don't give the milkman any notice before cancelling the order, so to be outside IR35 you shouldn't get any notice either. Some say it is only fair that you should get the same notice period as you have to give.

The reality is, a contractor can be sacked on the spot for anything and you're not really likely to sue them for a week's notice pay - so what difference does it make?

Then again, if they want to lay contractors off to save money, it would be nice to get 4 weeks dosh while looking for the next gig.

"Don't ask, don't get". Ask them to change the notice period to match what you have to give - see if they say yes or no.

Oh, and ignore my previous response - it was a bit too heavy-handed with hindsight.

[peace]

Yes, thats what I have said them - 1st is not required and alter 2nd or give the same right to me also.

Browne - thats what I feel. So is this common for you or any other contractor here? If the decision of being inside or outside IR35, a Contractor's responsibility, then are agencies held to pay any expenses, tax, etc.by HMRC? And if yes, in the experience of group here, do most agencies have this clause ?

Regarding termination, yes I dont mind anything. The only thing is I should have the same right.

[SueEllen]

Browne - thats what I feel. So is this common for you or any other contractor here? If the decision of being inside or outside IR35, a Contractor's responsibility, then are agencies held to pay any expenses, tax, etc.by HMRC? And if yes, in the experience of group here, do most agencies have this clause ?

I don't have this clause in my contract as it is very clear the contract is with my ltd who provide personnel, namely me or an approved subsitute, to do the work.

Regarding termination, yes I dont mind anything. The only thing is I should have the same right.

This is up to you to negiogiate.

[To BI or not to BI?]

Surely having equal termination notice periods (or even a termination notice period on the part of your Ltd.) implies MOO hence could raise a IR35 flag????

[TheFaQQer]

Surely having equal termination notice periods (or even a termination notice period on the part of your Ltd.) implies MOO hence could raise a IR35 flag????

It's an interesting debate - if you haven't got the right to give notice, it could be argued that you have an obligation to work there...

[To BI or not to BI?]

It's an interesting debate - if you haven't got the right to give notice, it could be argued that you have an obligation to work there...

It's the usual old story. If you hire an electrician to sort out your home, he's not going to give you a notice period and freck off half way through the job, is he?

[To BI or not to BI?]

It's an interesting debate - if you haven't got the right to give notice, it could be argued that you have an obligation to work there...

.. and it's not "me", it's my Ltd