An alternative to notice period clause

[thunderlizard]

Nice try but I don't think any agency is going to accept that one.

Assuming they back-to-back it with the client, I'd have thought anything that deters a client from terminating, or that nets the agency some money if they do, wouldn't be immediately be laughed out of hand by an agency.

[Old Greg]

Are 'penalty clauses' enforceable? I thought that they had to relate to actual losses suffered, but I may have got that wrong and certainly can't be bothered to google it.

NLUK, can you research this please and report back?

Cheers, OG.

[Wanderer]

Are 'penalty clauses' enforceable? I thought that they had to relate to actual losses suffered

It's not a black and white area but penalty clauses are permissible if they are a genuine pre-estimate of the loss that would be suffered - ie liquidated damages. The grey area is deciding if it is actually a penalty which would probably be held to be unenforceable if it came to court.

Thus, a contractor who is walked off site would have difficulty demanding payment of fees for the notice period (damages) if they walked straight into another contract the next day as there would be no damage to the business.

[TheFaQQer]

I guess it's a bit of a moot point but I'd be very interested to see if anyone has been paid off for their notice period and if the agency paid up willingly, backed down after legal action or if a case was brought by the contractor and won/lost in court. Maybe we should have a poll?

I know of one client that did it to a whole group - terminated the contracts and paid up 28 days notice. It needed a bit of a push to get the money, but nothing too major.

[Spacecadet]

I know of one client that did it to a whole group - terminated the contracts and paid up 28 days notice. It needed a bit of a push to get the money, but nothing too major.

I know someone else who was paid for their notice period without having to work it, they were direct though - no agency involved

[TheFaQQer]

I've just reviewed some advice from mine. He says you are talking utter bollocks.

HTH.

Who do you use? I'm impressed that between 19:58 when BB suggested it was an IR35 pointer, and 22:06, you got hold of someone who is an IR35 contract expert who told you that it was bollocks.

It's always worth knowing the details of such reliable people you can call on at all times of the evening.

[psychocandy]

Nice try but I don't think any agency is going to accept that one.

The other interesting point is that a client could tell the contractor "don't come in tomorrow" then the agency could turn around to the client and charge them for the notice period but not pass this money on to the contractor....

Lots of people seem to think that a notice period means nothing because there is no MOO but then why even have it in the contract if either party could just serve notice and point to the absence of MOO then walk away?

I guess it's a bit of a moot point but I'd be very interested to see if anyone has been paid off for their notice period and if the agency paid up willingly, backed down after legal action or if a case was brought by the contractor and won/lost in court. Maybe we should have a poll?

I always wondered this. Surely either party could give notice then not turn up/tell you not to come in for the whole period anyway because of MOO, so whats the point?

[Wanderer]

I always wondered this. Surely either party could give notice then not turn up/tell you not to come in for the whole period anyway because of MOO, so whats the point?

I've asked before but no one seems to know. Contractors start screaming about bad IR35 karma whenever the subject of MOO comes up and agents all go all very quiet.

[TheFaQQer]

I always wondered this. Surely either party could give notice then not turn up/tell you not to come in for the whole period anyway because of MOO, so whats the point?

No doubt TestMangler's anonymous expert knows.

[Spacecadet]

I've asked before but no one seems to know. Contractors start screaming about bad IR35 karma whenever the subject of MOO comes up and agents all go all very quiet.

I made this point in a another thread: The thing with MOO is that you should be able to plan for a time when the work dries up before the contract finishes.
Either due to a project being descoped or being finished way ahead of schedule. With any reasonably sized and well planned project you are going to see these events at least a couple of weeks in advance (In my experience anyway)

If you can be surprised by the client telling you that there is no work and you should stop coming in and invoicing till further notice then they are either lying about the fact there is no work or you have been working in a manner which would probably fail the IR35 tests anyway - that of too much direction AKA a bum on seat contractor.

In the event that the client has cancelled/suspended a project or found an internal resource to continue the work then they are effectively terminating and should be coughing up the cancellation charge.

Personally I think that 1 months cancellation charge is too much. 5 or 10 working days would have a better chance in court when trying to demonstrate lost business.

EDIT:
Even if demanding money for no work means you fail IR35 it might still be better for you financially, especially if you have only worked a couple of months of a contract as IR35 is done on a contract basis the extra cash from the unworked notice could be a lot more than the extra tax liability.