Opt out of Conduct of employment agencies 2003 act?

[rickom]

You really need to understand IR35 though. Do some reading up on it? Whether you're inside or outside IR35 will make a significant difference to your income after tax.

Can you please link or tell me what does it take for one to fall under this ?? I got a document sent from my agency to me. It says something as :

Considerations for Opting out of the Regulations

*•The Regulations are primarily designed to protect vulnerable temporary workers,
e.g. low paid workers in the hotel and catering industry who maybe under duress to
accept unscrupulous practices by employment agencies.

There is an argument that seeking protection under the EAA Regulations, which are
intended to protect temporary workers in general, is damaging to the argument that
the contractor is operating as a 'business on their own account,' i.e. that they can
take care of their own business affairs without the need for unwanted government
intervention.

Freelance contractors are also extremely conscious of the need to demonstrate that
they are operating on a true business-to-business basis with the agency. This is
important in the context of the IR35 legislation.

Limited Company contractors are often highly skilled, highly paid and operate under a
business to business contract with their agency and therefore do not see themselves
requiring the protection given to PAYE temporary workers.

Opting out provides a discernible method for a limited company contractor to distance
their supply of professional services, from that of doing temporary work in general.

Limited Company contractors that opt out of the EAA Regulations, are not required to
comply with certain procedural requirements of the Regulations i.e. provide evidence
of qualifications, training and experience that is stipulated by the client as necessary
for the assignment.


Considerations for remaining under the Regulations

**

•

Agencies are bound by the EAA Regulations to confirm details of all of qualifications,
experience and training, that the client considers necessary for the position to be
filled. In reality this means the contractor having to provide evidence of work history,
educational and training certificates required for the position. This process is likely
to delay setting up interviews, since all the information needs to be confirmed before
the introduction to the client. It may therefore lead to another candidate securing a
position instead of an opted in contractor.

*

•

Agencies have to give an undertaking to the contractor, that it will pay the contractor
for all hours/days worked. We do not see this as a real benefit since the majority
of contractors receive payment for all hours/days worked in any case, since they
produce work of a high and professional quality. This Regulation is designed to
protect those contractors who may not receive fees as a result of unsatisfactory work.

*

•

Agencies will need to verify the hours worked by the contractor, if for any reason
the contractor is unable to provide an authorised timesheet. This will mean that
the agency will need to contact the contractor’s line manager in order to establish
whether the hours the contractor claims to have worked, were actually worked. This
will inevitably lead to delays in paying the invoices of contractors.

*

•

They will be free to work for the client directly (or indirectly), without any restriction by
the agency. However in practice the agency will have agreed a transfer clause in its
contract with their client, which will charge a fee to the client if they employ or engage
a contractor up to a period of 8 weeks from the end of an assignment. The contractor
would therefore need to find alternative work (or take a holiday) for 8 weeks, if the
client is not to pay a fee to the agency.

This is still in favour of opting out. I am very confused.

Cheers!

[Wanderer]

This is still in favour of opting out. I am very confused.

Simple rule: If you are confused then DON'T OPT OUT, you are under no obligation to sign away your statutory rights. Who are you going to trust, a forum full of contractors or an agency?

I got a document sent from my agency to me.

And they are desperate for you to opt out. I wonder why? Do you think they have your best interests at heart? Oooh, your agency is trying to feed you quite a line of bulltulip here. Where do I start!

It says something as :

•The Regulations are primarily designed to protect vulnerable temporary workers,
e.g. low paid workers in the hotel and catering industry who maybe under duress to
accept unscrupulous practices by employment agencies.

Big and small, we are ALL vulnerable to agencies and their rip off business practices. These people do this stuff all day every day, it's their whole business and they are thick skinned, hard nosed business people.

Freelance contractors are also extremely conscious of the need to demonstrate that
they are operating on a true business-to-business basis with the agency. This is
important in the context of the IR35 legislation.

Agency FUD implying that the agency regulations are an IR35 pointer. There are lots of legal opinions out there which say that this is not true.

Limited Company contractors are often highly skilled, highly paid and operate under a
business to business contract with their agency and therefore do not see themselves
requiring the protection given to PAYE temporary workers.

The legislation was not aimed at "PAYE temporary workers" or else it would have said so. The fact is that it specifically includes Limited company contractors in it's scope.

Opting out provides a discernible method for a limited company contractor to distance
their supply of professional services, from that of doing temporary work in general.

Piffle. More IR35 FUD spreading. It's simply not true.

Limited Company contractors that opt out of the EAA Regulations, are not required to
comply with certain procedural requirements of the Regulations i.e. provide evidence
of qualifications, training and experience that is stipulated by the client as necessary
for the assignment.

True, but hardly a reason to opt out and there is no saying that the client won't demand that the agent carry out these checks as a matter of course. Indeed, a prudent agent would do this as part of their service, regardless of opt out status, surely?

Considerations for remaining under the Regulations

Agencies have to give an undertaking to the contractor, that it will pay the contractor
for all hours/days worked. We do not see this as a real benefit since the majority
of contractors receive payment for all hours/days worked in any case, since they
produce work of a high and professional quality. This Regulation is designed to
protect those contractors who may not receive fees as a result of unsatisfactory work.

With the best will in the world, disputes between contractors and clients will happen. Clients sometimes refuse to sign timesheets or go out of business. It's no reflection on the contractor - it's just that tulip happens sometimes. In the event that the tulip does hit the fan, the agency regulations shift the burden onto the agency.

Agencies will need to verify the hours worked by the contractor, if for any reason
the contractor is unable to provide an authorised timesheet. This will mean that
the agency will need to contact the contractor’s line manager in order to establish
whether the hours the contractor claims to have worked, were actually worked. This
will inevitably lead to delays in paying the invoices of contractors.

If you opt out then they will flatly refuse to pay you without a timesheet. What they are saying here is that if you don't opt out then not having a timesheet might delay the payment. Which would you prefer, paid late or paid never?

Furthermore, the agency will pay the invoice by the due date as per the terms of the contract and will be charged a penalty and interest if they fail to do that.

• They will be free to work for the client directly (or indirectly), without any restriction by
the agency. However in practice the agency will have agreed a transfer clause in its
contract with their client, which will charge a fee to the client if they employ or engage
a contractor up to a period of 8 weeks from the end of an assignment. The contractor
would therefore need to find alternative work (or take a holiday) for 8 weeks, if the
client is not to pay a fee to the agency.

It is true that the regulations limit the transfer time period and the fee the agency can charge. If you opt out then I can bet you that the agent will make the restriction clause 12 months rather than 8 weeks. By not opting out, you are doing the client a favour if they ever want to engage you direct or you want to go permie.

Do a Google for: site:contractoruk.com opt out and you will find a load of posts from contractors who wished they had ignored that opt out that the agency is so desperate for us to sign.

[TykeMerc]

Good points well made there Wanderer.

[rickom]

Thanks guys! That helps me a lot.

I have another question, something a very close acquaintance mentioned;(I read the same in one of the old threads as well) This matters i.e. "Opt-out" or "Opt-In" only if you are on your own limited company, if you are going via an umbrella , this does not make a difference.

I would love to hear your thoughts on the same. How does all of this come together if you decide to leave your umbrella and go limited ? I would like to mention this is a 6 month thing and I am hoping if all goes well i should be there for the next 2 rounds as well and perhaps go permanent after that.... so if i opt out/in now , do all my new contracts follow suite ?

Cheers!

[Wanderer]

I have another question, something a very close acquaintance mentioned; "Opt-out" or "Opt-In" only if you are on your own limited company, if you are going via an umbrella , this does not make a difference. I would love to hear your thoughts on the same.

The primary benefits of refusing to sign the opt out are:

1. The agency have to pay you even if the client won't sign timesheets or if the agency has not been paid (eg because the client went bankrupt).
2. Restrictive covenants in your contract are limited to 14 weeks from the start or 8 weeks from the end.

I think it's clear that these benefits apply equally to limited company and umbrella contractors. The same recommendation applies, don't opt out unless you are sure you know what you are doing.

If you choose to opt out of the regulations then the agency can and will put a clause in the contract saying that you won't be paid unless they get paid and that you have to produce signed timesheets or you won't get paid either. As for 2, do a search for "restrictive covenants" or "restraint of trade" on this forum. These are a controversial but very common restriction applied to contracts by agencies to protect their business interests and 6-12 months is typical if you opt out.

How does all of this come together if you decide to leave your umbrella and go limited ? I would like to mention this is a 6 month thing and I am hoping if all goes well i should be there for the next 2 rounds as well and perhaps go permanent after that.... so if i opt out/in now , do all my new contracts follow suite ?

If a contractor has opted out then they can withdraw the opt out at any time but this won't take affect until the current contract ends. Once withdrawn, subsequent contracts with that agency (if any) will be governed by the agency regulations.

If a contractor has not opted out before the "introduction or supply" to the end client then as far as I can see, there is no possibility to opt out even if you wanted to (not that I can see a reason that you would ever want to opt out anyway).

If the agency were playing hard ball over the opt out by refusing to proceed without an opt out (conduct which is illegal under the regulations) then the contractor could sign the opt out and sign the contract but withdraw the opt out BEFORE they started work for the client. It would be a nasty trick to pull but you are completely within your rights to do it.

[psychocandy]

Can you please link or tell me what does it take for one to fall under this ?? I got a document sent from my agency to me. It says something as :




This is still in favour of opting out. I am very confused.

Cheers!

Is this taken from a leaflet supplied by the agency by any chance? One provided by an agents trade body !!!!!

[psychocandy]

If the agency were playing hard ball over the opt out by refusing to proceed without an opt out (conduct which is illegal under the regulations) then the contractor could sign the opt out and sign the contract but withdraw the opt out BEFORE they started work for the client. It would be a nasty trick to pull but you are completely within your rights to do it.

No, that would be very funny !!!!

[kaiser78]

If you opt out then they will flatly refuse to pay you without a timesheet. What they are saying here is that if you don't opt out then not having a timesheet might delay the payment. Which would you prefer, paid late or paid never?

Where you state the above - I thought the agency still had to pay on time as per agreed payment terms when opted in. Appreciate if someone can please clarify as I am faced with this situation now whereby my timescaheets are not always being approved on time.

[zulu]

Already opted-out...now what???

Hello Everyone

I am a newbie contractor starting next week through my own limited company. I am in a dilemna now since I have already opted-out and the contract has been issued with the opt-out clause. After going through this forum and realising the financial implications which I could potentially face, I was wondering if there is any way I can change my contract to opt-in. Are the consequences of opting-out that serious, I mean in terms of agencies refusing to pay without authorised timesheets.
Also should I get my contract reviewed before I actually hit the ground running to look for any potential traps in the contract. Any advice much appreciated.

Cheers~

[zulu]

Hello Everyone

I am a newbie contractor starting next week through my own limited company. I am in a dilemna now since I have already opted-out and the contract has been issued with the opt-out clause. After going through this forum and realising the financial implications which I could potentially face, I was wondering if there is any way I can change my contract to opt-in. Are the consequences of opting-out that serious, I mean in terms of agencies refusing to pay without authorised timesheets.
Also should I get my contract reviewed before I actually hit the ground running to look for any potential traps in the contract. Any advice much appreciated.

Cheers~

Hello again

Could anyone please provide some guidance as I am planning to write to my agency that I would like to have the contract amended with the Opt-out removed. I haven't started work yet and technically since I have already met the client during the interview I am by default opted-in (as per the various forum posts). Does my signing the opt-out and the contract carrying the opt-out bear any significance incase of any future problems with the agency. Also if the agency refuses to amend the contract, can the contract still be treated as opt-in. I read that the contractor can write to the agency to have opt-out removed provided the services to the client have not yet started. Please throw some light as I am getting very anxious.