Opt out of Conduct of employment agencies 2003 act?

[northernladuk]

Eh? I don't get any of that. Makes no sense at all.

IR35 has sod all to do with it.

The option in/ out status should have no impact on rate u less you've been screwed over by the agency.

You have to pay CT regardless of where the money comes from..

[SlipTheJab]

I was advised by agents to opt-out for IR35 protection

With hindsight, as a business, the only real issue with IR35 is the cost.

I calculated that cost on my last contract, it turned out that (in my case)

RateFromAgency (approx)= RateDirectToClient - IR35cost (fromHMRCwebsite)

But I still had to pay corporation tax on the RateFromAgency.

I now work directly at RateDirectToClient after a long expensive period of being handcuffed.

I would never opt-out.

Remember when taking advice from a pimp, they are impartial, have no vested interests and only have your well being at heart

[squirrel99]

I am having fun with my contract extension and I was expecting a quiet day in the office. I thought I'll share this with you guys.

So I had 6 months contract via one agency, then on my 5th month end client informed that all contractors will now work through another agency - the transition has been agreed.

Now almost on a last minute, new agency freaked out asking me to sign the opt out form. I told them that I haven't sign it with my previous agency and so wouldn't sign with them.

So they got my old agency to call me and shout at me - apparently I have opt out (they think) and also I haven't been contracting long enough to understand what opting in means They say opting in is same as declaring myself as employee

Seriously long day with both agencies playing good cop / bad cop.

Just hoping to get extension signed soon

[northernladuk]

Now almost on a last minute, new agency freaked out asking me to sign the opt out form. I told them that I haven't sign it with my previous agency and so wouldn't sign with them.

But you need to step up if you want to deal with agents easily. You need to tell them why its pointless signing it now regardless of what you did with the other agent. If you can show them you understand what you are talking about they will be much much easier to bat off. Showing you don't know of means they will just play you like a newbie.

What you want is this bit...

Q: Are there any problems that might confront the contractor subsequent to opting in or opting out?

A: If the opt out is provided after “introduction or supply” [of the work-seeker] it is not valid. It will only apply in respect of subsequent (new) contracts. In my experience, few agencies arrange for an opt-out to be signed before an introduction to the client - so many opt outs are worthless and the Regulations apply. Often however this is a problem for the agency and of benefit to the contractor.

You are introduced and supplied so it's utterly pointless asking you to opt out. Send them this in an email and it's game over. No phone calls, no bullying nothing.

You've got to be smart about these things.

[squirrel99]

But you need to step up if you want to deal with agents easily. You need to tell them why its pointless signing it now regardless of what you did with the other agent. If you can show them you understand what you are talking about they will be much much easier to bat off. Showing you don't know of means they will just play you like a newbie.

What you want is this bit...



You are introduced and supplied so it's utterly pointless asking you to opt out. Send them this in an email and it's game over. No phone calls, no bullying nothing.

You've got to be smart about these things.

Thank you NLUK. This is helpful and comforting.

The agencies know that this is my first contract and their favourite phrase is 'you are the only contractor raising issues, we have hundreds of contractors who just agree to standard terms'

I have done plenty of reading here in forums, use Qdos for contract review, but still often sound like a newb im sure.

I'll see what happens tomorrow. Will send an email as per your post if they won't let go on this one.

[SueEllen]

Agents have said that to me even when I have already told them I know contractors X and Y who have worked through them on my last contract.

X and Y having told me about their contract negotiations with said agency.

[squirrel99]

Agents have said that to me even when I have already told them I know contractors X and Y who have worked through them on my last contract.

X and Y having told me about their contract negotiations with said agency.

They really know their game, don't they.

It looks like they left me in peace after all so I guess I am fine

I'll try to be smarter next time, so I don't have to suffer from a thousand phone calls from them asking to opt out...

[Sympatico]

Eh? I don't get any of that. Makes no sense at all.

Thanks NLUK, sorry, I was trying to keep it brief, I'll try and explain myself better

IR35 has sod all to do with it.

Agents use IR35 to sell opt-outs, which I now know is dubious advice.
Even if agents were correct and an opt-out was the only possible way to be IR35 compliant,
in my case, I would have still been worse off financially opting out

I was a sucker:
. I took contract through agency for rate advertised (RateFromAgency)
. I had no idea what they charged client (RateDirectToClient)
. The agent advised opt-out for IR35 reasons
. I didn’t spot handcuff clause until after I had signed their contract

With hindsight, now that I work directly for client:
. as client now pays me the rate the agency charged (RateDirectToClient)
. I know now the agency markup was 38%
. in my case 38% is approx IR35 overhead working at RateDirectToClient for a year
. i.e. YearAtRateFromAgency = (YearAtRateDirectToClient - PayeNicEmployersEmployees)

Because of opt-out:
. I was tied by handcuff and worked 2 years at RateFromAgency

The option in/ out status should have no impact on rate u less you've been screwed over by the agency.

It impacts your rate by handcuffing you

Without opt-out:
. No handcuff, so after 6 weeks through agency + 8 week break (with amenable client)
. I would have worked directly for client at RateDirectToClient without a transfer fee.

Reviewing my business takings per year, with hindsight
With the opt-out :
. Handcuffed to Agency and no IR35
. gross income = YearAtRateFromAgency
. net income = YearAtRateFromAgency – CorporationTax

That is worse than the worst case without the opt-out, i.e:
. I work 6 weeks through agency with 8 week gap
. From then on I work directly with client and come under IR35 (worst case)
. net income = YearAtRateDirectToClient – PayeNicEmployersEmployees
. net income = YearAtRateFromAgency

You have to pay CT regardless of where the money comes from..

Not if you have already paid Paye and employers employees NIC on it...

For me, the net income with the opt-out/handcuff was far less than with no opt-out, even under IR35.

[northernladuk]

Mehhh.. I've tried writing and re-writing a reply to this and I just can't make head nor tail of it. I think you are mixing a whole host of factors in that are not visible to us. From our perspective it's pretty simple... Opt in or out makes no difference to IR35 status whatever the agent tells you. Forget what they say and do what you want. That should be it.... but in your example PAYE starts coming in to it and you carry on making an issue of IR35 when there should be non. Did the engagement change or something. I just don't get why you start talking about PAYE.

So much wrong with that I can't begin so I won't.

[Sympatico]

Opt in or out makes no difference to IR35 status whatever the agent tells you.

absolutely agree

Forget what they say and do what you want.

absolutely agree

Starting at the point of completely agreeing with you that IR35 is not the issue with opt outs

1. The issue with opt outs are handcuff clauses

2. In my case, I was suckered and ended up handcuffed

3. Without the handcuff, I would have been working directly in 14 weeks.

Is that ok so far?

I was trying to make another point, which you don't seem to like,
about quite how expensive the handcuff can actually be

4. In my case, the cost of opt-out handcuff was SO HIGH
that it if I had not opted-out (working directly after 14 weeks)
and then ACTUALLY VOLUNTEERED to work UNDER IR35
I would STILL have been MUCH BETTER OFF

5. Which is ironic as IR35 was the reason I was suckered into the opt-out in the first place

Does that make sense?