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

[Rory Dwyer]

It is certainly is giving us food for thought Rory.

Dear Cojak,

Thank you, I am not trying to be confrontational. I am also not gloating, I am genuinely trying to clear up an area of ambiguity that has existed for many years now.

As it happens one of the most influential higher court rulings occurred in 2003 and if the legislation had been challenged prior to now, the legislation would have almost certainly have failed, if the defence barrister knew what he/she was on about. Luckily, we had a great one.

I have been a contractor for a long time before being in business of supplying resources. As I have said, I am letting people know, so that they can structure their affairs/contracts accordingly.

I am actually not on either side (other than my own of course) I am on the side of, acting honestly and ethically and abiding by your contract (either way) where you can and in most cases there will never be an issue.

I would also almost certainly advise any contractor to join PCG for the insurance that membership offers. I would also advise any agency to take out legal protection cover as the government can bankrupt you before you ever have your day in court.

It is criminal really, if you excuse the pun!

[Rory Dwyer]

So, the decission to opt in/out means nothing if you maintain your business outside of IR35. Is that what you're saying?

Precisely, and that is only the half of it.

A hirer who accepts a contractor who is the sole director of a PSC and is the individual who is supplied to the hirer chooses to maintain that they are in pre-dominant control of the individual and defacto the work seeker, then the hirer should be complying with the controlled associated company legislation.

A situation any hirer would definitely not wish to have to comply with, should you understand the compliance obligations.

[craig1]

Precisely, and that is only the half of it.

A hirer who accepts a contractor who is the sole director of a PSC and is the individual who is supplied to the hirer chooses to maintain that they are in control of the individual and defacto the work seeker, then the hirer should be complying with the controlled associated company legislation.

A situation any hirer would definitely not wish to have to comply with, should you understand the compliance criteria.

I disagree. You're taking a very black and white approach to "control" yet taking a different, more "shades of grey" stance to other points. This was one single court decision by a first-tier judge meaning it's almost impossible to use as a legal precedent as peer judges can disregard it as they see fit if the facts are even slightly different. If it were a Court of Appeal or Supreme Court decision then that would have substantial precedent authority but it's not. A first tier judge tends to go more on facts than law meaning the points above about the ethical stance of the contractor wanting to opt-out yet then wanting the protections are far more important than they ever would be at a higher level of court.

Control for IR35 is a fairly blunt tool that checks to see if the individual is a disgused employee. Control for the purposes of being an Employment Business can mean something entirely different and far more fluid.

As far as I can determine with the very limited case law to date, you can be within the definition of "controlled" by an Employment Business or their client but outside of the bounds of IR35 "control". For example, my current client has very tightly bound the parameters of my project, I have no scope to exceed this, I cannot hire additional staff outside of their tight control, I cannot extend the budget on my own account, I cannot extend the time on my own behalf, I'm ordered to give weekly updates to the project board in a set location, I must use the company's laptop and ID card and I have to perform many other defined items that are "controlled" by the client yet I am outside of IR35 by the rules set on that particular piece of tax governance because I can demonstrate legally and actually that I meet the points that make me outside of IR35.

If you wish to state bluntly that you have a firm precedent we need to adhere to then come back with a Court of Appeal or Supreme Court decision. Until then, all you can really say is that your facts trumped the facts of the other party and quite probably the judge was swayed by the ethical behaviour of that party in opting out then wanting to claim they're opted in by default

[Rory Dwyer]

I disagree. You're taking a very black and white approach to "control" yet taking a different, more "shades of grey" stance to other points. This was one single court decision by a first-tier judge meaning it's almost impossible to use as a legal precedent as peer judges can disregard it as they see fit if the facts are even slightly different. If it were a Court of Appeal or Supreme Court decision then that would have substantial precedent authority but it's not. A first tier judge tends to go more on facts than law meaning the points above about the ethical stance of the contractor wanting to opt-out yet then wanting the protections are far more important than they ever would be at a higher level of court.

Control for IR35 is a fairly blunt tool that checks to see if the individual is a disgused employee. Control for the purposes of being an Employment Business can mean something entirely different and far more fluid.

As far as I can determine with the very limited case law to date, you can be within the definition of "controlled" by an Employment Business or their client but outside of the bounds of IR35 "control". For example, my current client has very tightly bound the parameters of my project, I have no scope to exceed this, I cannot hire additional staff outside of their tight control, I cannot extend the budget on my own account, I cannot extend the time on my own behalf, I'm ordered to give weekly updates to the project board in a set location, I must use the company's laptop and ID card and I have to perform many other defined items that are "controlled" by the client yet I am outside of IR35 by the rules set on that particular piece of tax governance because I can demonstrate legally and actually that I meet the points that make me outside of IR35.

If you wish to state bluntly that you have a firm precedent we need to adhere to then come back with a Court of Appeal or Supreme Court decision. Until then, all you can really say is that your facts trumped the facts of the other party and quite probably the judge was swayed by the ethical behaviour of that party in opting out then wanting to claim they're opted in by default

Dear Craig1,

As I have stated previously, the judge's decision was based on a higher court precedent, which gave a clear definition of what control was necessary to satisfy the definite article "the control" in the Employment Agencies Act 1973.

That is black and white.

The judge in question was a District Judge in a proceeding conducted under the criminal code.

The trial was scheduled for a three day hearing.

You are correct in asserting that a judgement can be based on a point of law or based on facts of a combination or both depending on the circumstances.

But that is really only significant in this case insofar as it relates to an appeal. FYI no appeal was raised by the BIS.

Again, this is only half the story and appropriate weight should be given to the hirers position in the above scenario.

Given the facts you have eluded to in your engagement, if you chose to rely on the "Conduct Regs" as regards a complaint concerning your intermediary (assuming you have one) the test of control you would have to demonstrate would be that not only you as an individual but also your company as the work seeker would have to be under the predominant control of the hirer.

To do so would be giving a very clear message that you would in essence be a disguised employee and inside IR35

[craig1]

Dear Craig1,

As I have stated previously, the judge's decision was based on a higher court precedent, which gave a clear definition of what control was necessary to satisfy the definite article "the control" in the Employment Agencies Act 1973.

That is black and white.

The judge in question was a District Judge in a proceeding conducted under the criminal code.

The trial was scheduled for a three day hearing.

You are correct in asserting that a judgement can be based on a point of law or based on facts of a combination or both depending on the circumstances.

But that is really only significant in this case insofar as it relates to an appeal. FYI no appeal was raised by the BIS.

Again, this is only half the story and appropriate weight should be given to the hirers position in the above scenario.

Given the facts you have eluded to in your engagement, if you chose to rely on the "Conduct Regs" as regards a complaint concerning your intermediary (assuming you have one) the test of control you would have to demonstrate would be that not only you as an individual but also your company as the work seeker would have to be under the predominant control of the hirer.

To do so would be giving a very clear message that you would in essence be a disguised employee and inside IR35

No, again, it appears that you don't really understand the legal system in that a lower court decision given by the very lowest level of judge means nothing as a precedent. As a criminal case, the prosecution had to prove beyond a reasonable doubt meaning that it's useless in determining control at anything other than the immediate facts of your case. The "reasonable doubt" point is the important part there, it's so heavily fact weighted that it's meaningless as a general legal precedent. It's only civil cases that make precedents, not criminal ones. Again, as mentioned by other posters, I wonder what the judge would have decided if the contractor had not opted out and had acted completely ethically.

"Control" in terms of Employment Business is substantially different to "control" in terms of IR35. Of course I'm under the Employment Business definition of "control" but I'm also clearly not under the "control" required of IR35. I perform my duties within narrow bounds expected, i.e. I do the projects that my client has contracted me to deliver, but also with my own autonomy that marks me as independent and outside of IR35.

[Rory Dwyer]

No, again, it appears that you don't really understand the legal system in that a lower court decision given by the very lowest level of judge means nothing as a precedent. As a criminal case, the prosecution had to prove beyond a reasonable doubt meaning that it's useless in determining control at anything other than the immediate facts of your case. The "reasonable doubt" point is the important part there, it's so heavily fact weighted that it's meaningless as a general legal precedent. It's only civil cases that make precedents, not criminal ones. Again, as mentioned by other posters, I wonder what the judge would have decided if the contractor had not opted out and had acted completely ethically.

"Control" in terms of Employment Business is substantially different to "control" in terms of IR35. Of course I'm under the Employment Business definition of "control" but I'm also clearly not under the "control" required of IR35. I perform my duties within narrow bounds expected, i.e. I do the projects that my client has contracted me to deliver, but also with my own autonomy that marks me as independent and outside of IR35.

Dear Craig1,

I only said that the case CNL was defending was a criminal one. I didn't say that the Judge had to follow a decision of a criminal case at all. In fact he didn't.

With the greatest respect, you are not in a position of determining what the respective definitions of control are in relation to either the Employment Agencies Act 1973 or the Intermediaries Legislation or even the contract of service control requirements as neither am I.

Only a court of law can make that determination. As each case will be mixed law and provable fact overlaid with statute and precedent.

As I am sure you are aware, there can be a significant absence of direction and control in the case of employment yet the contract still to be considered a contract of service in the case of a master of a ship etc.

There is a significant amount of case law dealing with the required control for a contract of service verses a contract for service.

Before an individual needs to consider the "Conduct Regs" they first need to apply the definition of the Employment Agencies Act 1973.

Additionally, it would appear you are only considering "control" from the perspective of the work seeker and not the hirer.

There is considerable legislation covering the issue of controlled legal entities and the obligations thus imposed on the hirer whom takes the stance that they have taken the position of a controlling entity.

The judge in the Clearwater Consulting Case did not have to consider the opt out or behaviour, unethical or otherwise.

He only had to consider whether "the pre-dominant control" had passed from the individual supplied by the Work Seeker and as a result the defacto work seeker to the hirer.

You don't have to agree with me, I respect your right to believe anything you wish to believe. As I have said previously, many people believe lots of things that I choose not to.

If they find comfort in that belief, all power to them. But even though you may not appreciate what I am saying, I would suggest you don't confuse that with not opening your mind and taking a cold hard look at the reality.

I am not trying to convince you, I am sharing with you the knowledge I have gained so that you may make more informed choices moving forward.

[cojak]

To be quite frank, I'm tired of contractor or agency pretending that contracts are just bits of paper that don't mean anything. We have enough idiots on here asking for the best ways to shaft the other half, normally dumping one contract for a better one. But what does annoy me is when agents shaft decent contractors by not paying them their last invoice. Contractors are generally too small to fight back and we need a solicitor to set out what we need to do to take them on.

[Rory Dwyer]

To be quite frank, I'm tired of contractor or agency pretending that contracts are just bits of paper that don't mean anything. We have enough idiots on here asking for the best ways to shaft the other half, normally dumping one contract for a better one. But what does annoy me is when agents shaft decent contractors by not paying them their last invoice. Contractors are generally too small to fight back and we need a solicitor to set out what we need to do to take them on.

Dear Cojak,

In my experience the law only satisfies two groups of people, the rich or the government. Primarily because both have unlimited budgets.

That is why I suggested that any contractor should join PCG and rely to a degree on the protection it offers.

I also agree with you that all parties should act honestly and ethically.

Also, I would add that solicitors are a business to and have their own best interests at heart, regardless of what they might say

[DirtyDog]

So, the CNL contract says that you are acting as an "Employment Business" and then you said in court that you weren't - is that right?

[craig1]

I also agree with you that all parties should act honestly and ethically.

You've brought that up a few times now. Some agencies, and I'm not saying yours is one of them, are quite seriously unethical, your agency might be a shining beacon of ethical behaviour. By you saying that all parties should act honestly and ethically, does that mean:

- your agency does not unfairly use its relative bargaining power strength to push contractors into signing contracts that take away their rights while giving nothing in return?
- your agency does not use unethical tactics in getting contractors to opt-out, including outright lying about the legalities of the opt-out timing?
- your agency does not post false jobs to harvest CVs?
- your agency does not demand personal indemnities?
- your agency has an open-book policy with contractors and clients about your margin and you've never played the two parties against each other to secure an unethical increase in your margin?
- your agency has never said a role has "been filled" simply to get rid of an uneconomical but top-end contractor in place of a third-rate sap who'll give you a meaty margin?
- your agency and agents have never skimmed a contractor's LinkedIn contact list for potential contacts?

I could go on... but really if you say "no" to all of those then you're probably a very unique agency.