First Time contract

**Antman** · 18 June 2012, 15:54

Congratulations on landing your first contract.

Apart from the stuff about your contract, the questions are generic, the first timers section on the right should see you right.

The contract details you mentioned sounded a bit dodgy, get QDOS to review it.

Welcome.

**northernladuk** · 18 June 2012, 16:02

Originally posted by ItContractor123 View Post

Well I have read and read the sticky on here and looked through various threads and still have a few queries. Please be gentle…
I have landed my first contract and as expected the agency have sent through an opt out form (“Regulation 32 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003”) and a draft contract with “Opt out Contract – Conduct Regulations 2003” in the title.
Now I have already met the client and they have offered me the position via the agency. It is for a 3mth contract. So if I decide to opt out is it actually enforceable as I have already met and accepted the offer?

Have you read the Opt out sticky? Very indepth discussion on this issue here. Might help.

http://forums.contractoruk.com/busin...-2003-act.html

The draft contract the agency have sent has a few things in that I think I should try and change.
1. I have to work till the end of the contract. I think I should ask for a notice period of one week. The agency can terminate the contract immediately so I think it is only fair.

No notice contracts are becoming a lot more popular now. A certain bank has been doing them for awhile. At the end of the day you can leave if you want to, will cause a fuss but very much doubt it will go past handbags and no much more than if you used your notice period IMO. I wouldn't say anything is fair or not fair. It is the terms of the contract. I doubt they will go from zero notice to a week, maybe a month. Either way, notice periods are a bit of a moot point. There is MOO on both sides and instant termination clauses so it is argueable if having a notice period is any use.

2. The agency can terminate the contract for amongst other reasons “unsuitability” and then shall be entitled to recover from me additional expenditure incurred by the agency.

Hmm, odd word to use. I would expect some clause in to say if you were not able to do the role for some reason, possibly over stating your skills or something, they should have the right to bin you but there are better words than 'unsuitability'. They could pull this on you if you don't get on with the team or something ridiculous. I would deffo try get that word removed or better defined.

3. I can’t work for client for 6 mths following the termination of the contract. This seems long considering the length of the contract.

Nope that is a pretty standard term for both permies and contractors. I believe a year is unenforceable due to your human rights to work but 6 months is quite enforceable. Rarely invoked and will more likely be the agent trying to protect his find. There are many situations where this can be negotiatied or client will tell the agent to push off if it becomes an issue. I don't think we have had any cases on the forums of this really causing a problem but I wouldn't use that as an excuse to get yourself back on site via a different agency in that time. They will play

and it probably won't work well. If the client likes you he will get you back on site via the old agent so no probs.

4. It looks like it is monthly pay so I will see if I can get that to weekly.

Good luck with that one. Sometimes works, sometimes doesn't. I personally haven't had a weekly pay option and had anything between 14 to 35 days in the last few years. Haven't had a problem yet.

I’m sorting out a company, accountant and insurance (public liability and professional indemnity insurance. Anything else I am missing?

Get your contract reviewed by QDOS. You get 3 free a year if you buy their PI/PL.

I also need to set up the company. My wife is currently working part time at the moment but may not be working in a year or so. Is it worth adding her as for example a 30% shareholder now (but not employed so just getting dividends). Then if she doesn't work for a year or so I can employ her and she can do all the paper work/admin/website work. Or should I just split the shares at that point.

Get an accoutant and take advice. If you give her 30% now you MUST pay her share which means you might end up paying more tax while she is working. You cannot waive dividends. Just on personal opinion of this be very careful about employing her to do what could effectively be nothing. Paying someone 8k for a bit of admin of a contracting business will not cut it. Up to you depending on what your accountant says.

**Contreras** · 18 June 2012, 17:06

Originally posted by ItContractor123 View Post

Anything else I am missing?

Voluntary VAT registration & the VAT Flat Rate Scheme.

**ItContractor123** · 18 June 2012, 17:49

Thanks NLUK.
I have read the sticky but will go through it again.
Fair enough with the no notice part I'll just stick with it.The MOO part of the contract seems to fit the bill.

With regards to the unsuitability the draft contract says

"XX may. by giving notice in writing, at any rime
terminate this Contract immediately without liability
for compensation in accordance with any of the
following provisions if:

c. the Client terminates its requirement with XX due
to what the Client in its sole discretion considers to
be the Consultant’s technical incompetence,
unprofessional or inadequate performance,
unsuitability, misconduct failure to comply with the
Client’s policies and procedures or for unsatisfactory
references (including failure to provide references):"

I think the other aspects are fine but unsuitability is a bit vague and I'll try and get it changed.

Fair enough on the 6mths part. I'll aim for 14 days payment and see what they say.
I will get the insurance through QDOS and get them to review the contract as well.
I will check with my accountant about company structure as well and registering for VAT.

Thanks for all the help.

**malvolio** · 18 June 2012, 18:11

Get PCG Plus anyway. It's a lot more than an insurance policy

**psychocandy** · 19 June 2012, 08:37

No need to employ wife. Just make her a shareholder - she doesnt have to do any work for the company. An accountant will advise you of best share split.

As, malvy says, joining PCG is a good idea too.

**Wanderer** · 19 June 2012, 20:43

Originally posted by ItContractor123 View Post

if I decide to opt out is it actually enforceable as I have already met and accepted the offer?

It's a good question. The law says the opt out must happen before the "introduction or supply". Some contractors read this as saying that you've been introduced so the opt out is not valid. Agents read it to say that you can opt out as you haven't yet been supplied. Ultimately, someone will have to test this in court but I've never heard of it getting that far.

Originally posted by ItContractor123 View Post

The draft contract the agency have sent has a few things in that I think I should try and change.
1. I have to work till the end of the contract. I think I should ask for a notice period of one week. The agency can terminate the contract immediately so I think it is only fair.
2. The agency can terminate the contract for amongst other reasons “unsuitability” and then shall be entitled to recover from me additional expenditure incurred by the agency.
3. I can’t work for client for 6 mths following the termination of the contract. This seems long considering the length of the contract.
4. It looks like it is monthly pay so I will see if I can get that to weekly.

1. Some IR35 reviews suggest reciprocal notice periods are best, has anyone else heard this? I wouldn't be happy taking on a contract without a notice period in it but people here say it's getting common so you might just have to lump it. Many people think you could just refuse to work out the remainder of the contract and because there is no Mutuality of Obligation in most contracts they can't force you to work anyway. Agents will doubtless try to screw you for some money if you leave early

2. Mostly these clauses are used to screw noobie contractors out of a few weeks money if they leave early. First part is fair enough, if they tried to invoke the second part against me then they would have a hell of a tulip fight on their hands.

3. That's fairly standard, though if you refuse to sign the opt out then it's not enforceable....

4. The line is "My LTD is not willing to advance YourAgency that much credit. I suggest that we look at weekly payment terms with a view to extending it once you establish a good record of paying on time". If you get stuck with 30 day terms then make sure you can submit invoices weekly so the maximum credit you are extending to them is 37 days. If you submit monthly then you have up to 60 days outstanding. Be prepared for wailing and gnashing of teeth on this one. When they refer it to the finance director for approval you know you are getting through to the right people.

Originally posted by ItContractor123 View Post

I’m sorting out a company, accountant and insurance (public liability and professional indemnity insurance. Anything else I am missing?

Yes, like a few others say - check out the PCG. They are good guys and can kick start you with the whole lot in one package...

Originally posted by ItContractor123 View Post

My wife is currently working part time at the moment but may not be working in a year or so. Is it worth adding her as for example a 30% shareholder now (but not employed so just getting dividends). Then if she doesn't work for a year or so I can employ her and she can do all the paper work/admin/website work. Or should I just split the shares at that point.

Can't really say without knowing what your company profit is likely to be. Nixon Williams have a nice calculator. Plug your values in, move the sliders around and see what works best. Use up your spouse's allowance by all means but try not to put them into the higher rate tax bracket if you can avoid it otherwise it complicates their tax affairs and they may not be too pleased about the bills for extra tax...

Originally posted by ItContractor123 View Post

The agency is fairly large (turn over was ~69m last year, post tax profit of 1.2m) so I would think it is less likely they will go bust and not pay me.
However it does mean if the client doesn’t pay the agency they won’t pay me.

Not if you don't opt out.....

**ItContractor123** · 20 June 2012, 08:56

Thanks for help wanderer. When they raise the initial contract I will get it checked for IR35 and check the payment terms.
I will definitely push for weekly or fortnightly payment as well and will ensure I invoice weekly regardless.
Going to leave the wife out of the company for now.

**psychocandy** · 20 June 2012, 09:41

Another thing that has been suggested before if the agent gives you too much grief about opting out is that an opt out can be withdrawn at any time before you start the contract.

Theoretically, there's nothing stopping you opting out, then, sending a letter in writing recorded delivery to the agent to arrive the day before contract start withdrawing your opt out.

Not going to make the agent happen, and not sure if anyone has ever done this. But agent is hardly likely to can the whole deal and upset the client the day before they're expecting to see you on site.

First Time contract