Am I Screwed? Early Contract Termination

[Fresh Air]

Hi All,

I'm currently 5 months into a contract with a client via an agency. I have been approached to work on another job which would mean early termination of the contract.

Agreement terms include the text;

5.5 This Agreement shall commence in accordance with the Schedule and shall either (as specified in the Schedule) continue until completion of the Consultancy Services to the reasonable satisfaction of the Client or the termination date as specified in the Schedule at which time this Agreement shall expire automatically unless previously terminated by the Employment Business.
5.6 Notwithstanding sub-clause 5.5 of this Agreement, the Employment Business may at any time without notice and without liability instruct the Consultancy to cease work on the Consultancy Services in any event and where:
(goes on to list various scenarios of breach - criminal activity, incapacity, being useless etc etc.)

The Schedule gives the 'Anticipated Duration' of 12 months and specifies the 'Start Date' and 'Estimated Completion Date'. It also gives a 'Notice Period' of '4 weeks by each party'.

(italics denote exact text in contract)

Within the contract there are no clauses explicitly stating that the Consultancy (MyCo Ltd) can not terminate the contract - nor does it state that it can. There are no penalty/damage clauses (except those for breach if IP rights etc).

What is the general consensus for me terminating the contract early with the 4 weeks notice (I have no issue with providing the client or agent with this? Yay or Nay?

[northernladuk]

The Schedule gives the 'Anticipated Duration' of 12 months and specifies the 'Start Date' and 'Estimated Completion Date'. It also gives a 'Notice Period' of '4 weeks by each party'.
(italics denote exact text in contract)

Within the contract there are no clauses explicitly stating that the Consultancy (MyCo Ltd) can not terminate the contract - nor does it state that it can. There are no penalty/damage clauses (except those for breach if IP rights etc).

What is the general consensus for me terminating the contract early with the 4 weeks notice (I have no issue with providing the client or agent with this? Yay or Nay?

Haven't you kinda already answered your question?

If you read your contract it should also have a right of substitution in it. Why not use that instead?

[MarillionFan]

Haven't you kinda already answered your question?

If you read your contract it should also have a right of substitution in it. Why not use that instead?

WHS.

Nothing wrong with using your notice.

[Fresh Air]

Haven't you kinda already answered your question?

If you read your contract it should also have a right of substitution in it. Why not use that instead?

I think my uncertainty is due to there not being an explicit clause that states that the 'employment business' and 'consultancy' may give notice as detailed in the schedule.

In reality, whilst the contract does include a right of substitution, I doubt it could or would be permitted to be exercised......I class myself as within IR35....but thats a whole other threasd!

[escapeUK]

In reality, whilst the contract does include a right of substitution, I doubt it could or would be permitted to be exercised......I class myself as within IR35....but thats a whole other threasd!

Someone has to pay all the taxes for the socialist BS.

[malvolio]

I think my uncertainty is due to there not being an explicit clause that states that the 'employment business' and 'consultancy' may give notice as detailed in the schedule.

In reality, whilst the contract does include a right of substitution, I doubt it could or would be permitted to be exercised......I class myself as within IR35....but thats a whole other threasd!

No, it's rather germane to this one. Either you have an RoS or you don't. If you do, IR35 doesn't really apply and you've been paying 20% more tax than you need to for the last five months.

However, it looks like you don't have a right to terminate. So you'd better think of how you are going to negotiate an exit. Or, just a silly thought, complete the job you've been contracted to complete.

[Fresh Air]

No, it's rather germane to this one. Either you have an RoS or you don't. If you do, IR35 doesn't really apply and you've been paying 20% more tax than you need to for the last five months.

However, it looks like you don't have a right to terminate. So you'd better think of how you are going to negotiate an exit. Or, just a silly thought, complete the job you've been contracted to complete.

Indeed but the RoS not only needs to be written but may be exercised - in reality, in my situation at least, I highly doubt RoS would be permitted, but like I say that's a whole different thread.

The Schedule states 'Notice Period : 4 weeks by each party' and lists the 'consultancy' and 'employment business' as those parties encompassed by the 'agreement'. What specifically leads you to the conclusion that I don't have the right to terminate?

[malvolio]

Indeed but the RoS not only needs to be written but may be exercised - in reality, in my situation at least, I highly doubt RoS would be permitted, but like I say that's a whole different thread.

The Schedule states 'Notice Period : 4 weeks by each party' and lists the 'consultancy' and 'employment business' as those parties encompassed by the 'agreement'. What specifically leads you to the conclusion that I don't have the right to terminate?

A good rep will get you out of IR35 if you have a genuine RoS clause. Permies can't substitute, you possibly can, ergo you are not an employee, ergo no IR35. On the ohther hand, having a notice period of four weeks implies they potetnially have to pay you for four weeks when there is no work to be done. Which rather screws Mutuality, if you think about. Or there's D&C, and the chances of yuo making a lodss on the contract by their early cancellation, for example. Nobody with any wit volunteers to pay IR35 unless they really a pretend employee.

But hey. it's your money.

However, I missed the "4 weeks by each party". Which means you can give four weeks notice, just like it says. Is that a problem?

[Fresh Air]

A good rep will get you out of IR35 if you have a genuine RoS clause. Permies can't substitute, you possibly can, ergo you are not an employee, ergo no IR35. On the ohther hand, having a notice period of four weeks implies they potetnially have to pay you for four weeks when there is no work to be done. Which rather screws Mutuality, if you think about. Or there's D&C, and the chances of yuo making a lodss on the contract by their early cancellation, for example. Nobody with any wit volunteers to pay IR35 unless they really a pretend employee.

But hey. it's your money.

However, I missed the "4 weeks by each party". Which means you can give four weeks notice, just like it says. Is that a problem?

Thanks Malvolio.

My main concern is that there is no specific clause within the contract that states that I can terminate the contract (Agreement Term clause text in first post), BUT the contract Schedule mentions a 'Notice Period = 4 weeks be each party'.

I guess what I'm really trying to establish is that can I issue 4 weeks notice even though there is no mention of being able to terminate in the agreements' clauses?

I have no issue/problem at all with providing both the agent and client with 4 weeks notice.

[PSK]

Without reading the agreement in it's entirety it it difficult to be certain but usually the assignment schedule forms part of the agreement to ensure it's provisions have force. There'll usually be provision in the terms and conditions that will state this explicitly. The one wrinkle is that there'll also often be provision in the terms and conditions that sets out the hierarchy, for example that the terms and conditions have priority in case of conflict. This may be needed where the agency's or client's lawyers produce the terms and conditions, the agency's consultant or client's line manager writes the schedule and they wouldn't want the schedule to modify something important. If there is such a hierarchy set out, what's in the terms and conditions about termination will probably stand if it conflicts with the schedule. If the terms and conditions are silent, what is in the schedule will carry. Depending on circumstances, there might be hook outs to the agency/client's terms of business which, if there is, you'd want to have read. Sometimes, communications after the contract is incorporated can modify things as well.