The "Conduct Reg's" are virtually unenforceable against your intermediary

[Rory Dwyer]

No thanks.

I read the entire thread and you refused to answer other posters' extremely simple questions.

There as Andy Hallett made a couple of very sensible points. (And I disagree with him 99% of the time.)

No problem, any questions I didn't answer was on the grounds of the continuing civil litigation. As I explained at the very beginning, let's see what Andy's team comes up with.

[SteelyDan]

I've read thru this 10 pager & a bit fatigued; so, if we believe what we read, what are we actually saying here?

• Opting in/out contractually means frack all?
• An agency can actually lie in contract documentation, i.e. we (agency) are acting as an Employment Business... even when they're not - because they don't fit the legal definition of an EB & thereby rendering the opt in/out meaningless?

In general, I think I'll simply stick to ensuring:

• I'm confident that my working practices keep me outside of IR35 (although not strictly related to this subject anyway)
• I become selective on agencies which I work through; where possible use tried and tested ones which I've worked through previously & trust them to pay on time
• Not bother about this opt in/out at all

[Wanderer]

I've read thru this 10 pager & a bit fatigued; so, if we believe what we read, what are we actually saying here?

• Opting in/out contractually means frack all?
• An agency can actually lie in contract documentation, i.e. we (agency) are acting as an Employment Business... even when they're not - because they don't fit the legal definition of an EB & thereby rendering the opt in/out meaningless?

Nope, each case would be decided on it's merits (presuming it ever came to court). And let's not get too far ahead of ourselves here. This case appears to be a criminal case brought to court by the BIS rather than a civil case where a contractor would typically use the small claims court. My feeling is that rather than risk potential damage to their reputation and incurring a huge cost defending themselves in a criminal case against the substantial resources of the BIS, most agencies would probably back down and settle the case.

What's the way forward? Business as usual, don't opt out. In the best case, not opting out gives the contractor the protection of the legislation and in the worst case it makes no difference.

I would also make sure that the agency explicitly state that they are acting as an employment business in the contract. I know this was overruled in this case but read my first paragraph again...

[Rory Dwyer]

Nope, each case would be decided on it's merits (presuming it ever came to court). And let's not get too far ahead of ourselves here. This case appears to be a criminal case brought to court by the BIS rather than a civil case where a contractor would typically use the small claims court. My feeling is that rather than risk potential damage to their reputation and incurring a huge cost defending themselves in a criminal case against the substantial resources of the BIS, most agencies would probably back down and settle the case.

What's the way forward? Business as usual, don't opt out. In the best case, not opting out gives the contractor the protection of the legislation and in the worst case it makes no difference.

I would also make sure that the agency explicitly state that they are acting as an employment business in the contract. I know this was overruled in this case but read my first paragraph again...

Dear Wanderer,

If I may, for the benefit of your understanding and for the subsequent readers of this forum, I would like to correct your assertions, where they are incorrect.

The case that determined the BIS v CNL case was a criminal case (as this is the penal code that governs the "Conduct Regs") although this has been muted as being changed as part of the red tape review.

But the important point, is that the Judge had to abide by the ruling in the Accenture v HMRC 2003 as would any judge in any lower court or risk the judgement being over turned on appeal.

The second misconception is in the area of what constitutes an employment business. An Agency could with all accuracy and integrity be of the position that they were supplying highly skilled individuals who were contractually and in reality not under the pre dominant control of the hirer.

As such, the Agency would not be an Employment Business as far as the EAA would determine for that one case of supply, regardless of whether the contract states EB or not.

Now there may be contractual terms in the contract which forbade predominant control being passed but if in reality this is what happened and the contractor wished to then seek to rely on the "Conduct Regs" then the contractor and the hirer would have to be able to prove that predominant control had passed.

Well, I for one, who if maintaining, I was outside of IR35 for tax purposes and was seeking to prove I was inside the "Conduct Regs" would be in a very precarious position.

As would the hirer.

[Rory Dwyer]

I've read thru this 10 pager & a bit fatigued; so, if we believe what we read, what are we actually saying here?

• Opting in/out contractually means frack all?
• An agency can actually lie in contract documentation, i.e. we (agency) are acting as an Employment Business... even when they're not - because they don't fit the legal definition of an EB & thereby rendering the opt in/out meaningless?

In general, I think I'll simply stick to ensuring:

• I'm confident that my working practices keep me outside of IR35 (although not strictly related to this subject anyway)
• I become selective on agencies which I work through; where possible use tried and tested ones which I've worked through previously & trust them to pay on time
• Not bother about this opt in/out at all

Dear SteelyDan,

For the benefit of understanding of yourself and others, I have tried to address some of the points you raise.

A contractor and a hirer can rely on the "Conduct Regs" if on the basis that predominant control had passed from one to the other.

Please read the Egos article for details of what constitutes pre dominant control, but in essence, it directly conflicts with the position one would argue in relation to IR35 and the controlled associated companies legislation.

Your point about using tried and trusted agencies who pay you on time is to miss the point. The "Conduct Regs" only assist on payment for anything under the control of the EB.

If a contractor breaches their contract and that this was not under the control of the EB then the "Conduct Regs" do not offer any protection even if a judge decided that the "Conduct Regs" applied.

My advice to any contractor and agency, is to act honestly and ethically, do not breach your contract (either party) and for the contractor to be a member of PCG and for an agency to take out legal cover protection.

[DirtyDog]

I've read thru this 10 pager & a bit fatigued; so, if we believe what we read, what are we actually saying here?

• Opting in/out contractually means frack all?

It depends who you believe. The two agents who have posted in the thread have very different views - Rory says it always means frack all; Andy says that he's been to court on these matters and found the opt out to be relevant. As ever, it depends on the circumstances of your case and whether they match the precedent set in Accenture v HMRC.

• An agency can actually lie in contract documentation, i.e. we (agency) are acting as an Employment Business... even when they're not - because they don't fit the legal definition of an EB & thereby rendering the opt in/out meaningless?

Yes. Whether this would have any impact on the validity of the contract or not is a question that Rory hasn't answered yet.

[SteelyDan]

Dear SteelyDan,

Your point about using tried and trusted agencies who pay you on time is to miss the point. The "Conduct Regs" only assist on payment for anything under the control of the EB.

I don't think I've missed the point at all.

If an agency blatantly lies by stating they are acting as an EB, when they are not, then they are leading a contractor to believe the opt in/out are valid options.

By opting in, the contractor believes that regardless of whether the hiring co pays the agency, or not, the contractor is assured that he will be paid any amounts due. By opting out, the contractor does not have these assurances, & he/she therefore pursues the opportunity at their own risk.

Now, if the agency has lied (stated a falsehood) in the contract documentation to the effect that they are an EB, when in actual fact they are not (as they do not meet the definition criteria), then the contractor (through no fault of his/her own) is potentially in a high risk situation, i.e. the opt in/out has no relevance, and the contractor therefore has no assurance that he will be paid by the agency.

What I'm saying is, that I would look to use agencies which I have worked through before, where there have been no issues with regards to receiving reliable payment for work done.

[Rory Dwyer]

It depends who you believe. The two agents who have posted in the thread have very different views - Rory says it always means frack all; Andy says that he's been to court on these matters and found the opt out to be relevant. As ever, it depends on the circumstances of your case and whether they match the precedent set in Accenture v HMRC.


Yes. Whether this would have any impact on the validity of the contract or not is a question that Rory hasn't answered yet.

Dear Dirty Dog,

I actually didn't say that it always means frack all.

For the record I will repeat what I am saying;

1) If you as an individual (contractor) supplied by a work seeker (your company(PSC)) and your respective hirer (end client) choose to rely on the "Conduct Regs" as applicable legislation covering your engagement, then you and your hirer will need to prove that you as an individual and your company has passed 'THE PREDOMINANT CONTROL' to the hirer and that the hirer has accepted being in that position.

If you can not, then the intermediary will not be covered by the "Conduct Regulations" regardless of whether you opt in or opt out as they will not have satisfied the test of an Employment Business as defined by the Employment Agencies Act 1973.

[Rory Dwyer]

I don't think I've missed the point at all.

If an agency blatantly lies by stating they are acting as an EB, when they are not, then they are leading a contractor to believe the opt in/out are valid options.

By opting in, the contractor believes that regardless of whether the hiring co pays the agency, or not, the contractor is assured that he will be paid any amounts due. By opting out, the contractor does not have these assurances, & he/she therefore pursues the opportunity at their own risk.

Now, if the agency has lied (stated a falsehood) in the contract documentation to the effect that they are an EB, when in actual fact they are not (as they do not meet the definition criteria), then the contractor (through no fault of his/her own) is potentially in a high risk situation, i.e. the opt in/out has no relevance, and the contractor therefore has no assurance that he will be paid by the agency.

What I'm saying is, that I would look to use agencies which I have worked through before, where there have been no issues with regards to receiving reliable payment for work done.

Dear Steely Dan,

For your edification,

As in the case of Accenture v HMRC 2003 the parties were trying to argue that certain parties were or were not an Employment Business as defined by the Employment Agencies Act 1973.

Any consultancy could be classified as an Employment Business as defined by the EAA regardless of whether they say they are or not as it depends on whether they are supplying people under the predominant control of the hirer for any particular engagement.

Additionally, an intermediary can at the same time be an Employment Business and an Employment Agency not an Employment Business and not an Employment Agency as defined by the EAA on any given engagement depending on the facts of the engagement.

By not being covered by the "Conduct Regs" does not remove any of the remedies at Law for non payment and as I have previously stated, being a PCG member would provide that protection as well

For the record, CNL, which had to cease trading because of the damages incurred, was at all times providing individuals in their opinion "not under the predominant control of the hirer" but I do accept that this will not always be the case with other intermediaries.

[northernladuk]

Now there may be contractual terms in the contract which forbade predominant control being passed but if in reality this is what happened and the contractor wished to then seek to rely on the "Conduct Regs" then the contractor and the hirer would have to be able to prove that predominant control had passed.

Well, I for one, who if maintaining, I was outside of IR35 for tax purposes and was seeking to prove I was inside the "Conduct Regs" would be in a very precarious position.

Surely this is a very key message here that seems not to being emphasised.