Simple retainer agreement?

[speling bee]

Didn't read the whole thread but can you not go down a call off days approach? You could write the agreement such that they won't waste them and lose the money which seems to be common in call off agreements between big businesses. Maybe even word it that they have call off days to be paid as and when they are used. May not be how call off agreements are usually done but surely wouldn't be hard to word to suit both parties. Permies can't do call off so IR35 wouldn't be a problem .

Didn't read the whole post, but I have worked on a call-off contract before (for consultancy rather than support).

[TheCyclingProgrammer]

Didn't read the whole thread but can you not go down a call off days approach? You could write the agreement such that they won't waste them and lose the money which seems to be common in call off agreements between big businesses. Maybe even word it that they have call off days to be paid as and when they are used. May not be how call off agreements are usually done but surely wouldn't be hard to word to suit both parties. Permies can't do call off so IR35 wouldn't be a problem .

I have to admit I'm not very familiar with the call off days approach. I think what they are looking for is some sort of reassurance that I will be available for a certain amount of time each month as opposed to the current situation where they can ask me if I'm available but I'll typically have to turn the work down as I'm too busy on other projects.

The client is a good one so I'm sure we can come to an agreement we're all happy with and I have no doubts that they'll be understanding of my concerns re: IR35 even though it's not really their problem.

I have actually just emailed my client and what I have proposed at this stage is:

* A commitment to provide up to 4 days service per calendar month for a fixed cost
* Any additional service beyond the 4 days would be billed at my standard day rate but there would be no obligation for me to accept any additional work and they would be under no obligation to provide additional work.
* Whilst I will try and respond to urgent issues ASAP as a matter of professional courtesy, I will be entitled to schedule any work within a given month as I see fit. As somebody else said, constantly doing small bits of adhoc work here and there can be distracting and I'd rather batch it up into blocks of work.
* The fixed cost will apply even if they don't use all 4 days however the agreement will allow for a certain amount (probably up to 50%) of the time to be rolled over or pulled forward, giving some flexibility on both sides.
* The schedule will reiterate the existing right of substitution clause and it will be made very clear that if I need to use it, I will. I will be responsible for ensuring the substitute is fully qualified and will oversee any work performed but they will not be able to unreasonably reject a substitute.

Point 2 should hopefully reinforce the lack of MOO outside the scope of the retainer agreement and point 3 should help reinforce the D&C issue which I feel is already largely covered by my general working practices. Obviously the genuine RoS clause should hopefully be an IR35 killer if they others aren't.

The whole thing will be wrapped up in a schedule to my already IR35 friendly master service agreement (PCG template) and reviewed by QDOS.

That should, hopefully, cover most of the bases.

[northernladuk]

I can't see for one minute why IR35 would be an issue here. You have multiple clients, a temporary and very flexible arrangement, risk they may not want you, no fixed days and many more points. As close to safe as you could possibly be surely. I don't see a single thing in there a permie could possibly do. I am not even sure PCG would have a template for this as it is completely different to out 'standard' way of working.

[TheCyclingProgrammer]

I can't see for one minute why IR35 would be an issue here. You have multiple clients, a temporary and very flexible arrangement, risk they may not want you, no fixed days and many more points. As close to safe as you could possibly be surely. I don't see a single thing in there a permie could possibly do. I am not even sure PCG would have a template for this as it is completely different to out 'standard' way of working.

Generally I agree with you. I've just read a few articles that basically say that IR35 and retainer agreements aren't compatible due to the MOO implications and its got me worrying (probably unnecessarily).

This was one:
Why retainers are bad for consultants « Steve J Bicknell

OTOH this article seems a bit more balanced and seems to take the view that MOO isn't an issue if there is lack of D&C:
Retainer Fees and IR35 - Contractor Weekly

[northernladuk]

Interesting. I haven't really considered retainers before so kind of new to after a quick scan of both those articles I find it quite difficult to agree. Maybe a very badly written one in some circumstances maybe bad but in a genuine situation like this with a well written agreement I can't see how IR35 would touch it. Maybe I should read the post on more detail to understand the specifics but a in an example situation where the retainer fee is less than the full fee and the full fee only gets paid on days worked then there is zero MoO as you may actually may never be needed and in fact demonstrates strong financial risk as well. If the contract demonstrates flexibility when you are used it becomes as required which can't be seen as an obligation either. I think there are many easy ways of getting round the issues mentioned in a real situation.
I also think if you can make this more of a call off situation you dodge all these factors as well.

[northernladuk]

Just to add... If what these articles say is actually true I would be very dissapointed if HMRC were willing to challenge them. You are encouraged to act like a business (e.g. the BETs test and IR35) and not like a permie so when you do they try they try to apply a rule that wasn't designed to challenge this type of situation. Use it challenge bum on seat disguised employment fine but leave business alone that are trying to do it properly.

[northernladuk]

And final thing before I shut up. If you word the agreement to be with your limited and do not mention a consultant at all some form of MoO maybe with the LTD (but surely that is what a B2B contract is there to do) but they cannot demonstrate any connection to one particular person . If no person is mentioned how can the apply an employment test against nobody?

[jamesbrown]

It seems like I would be silly to turn this down over some IR35 concerns

FWIW, I agree. You only need to demonstrate one of the three convincingly, and I wouldn't identify MoO (alone) as the best foundation (in any case, there's a good chance that you'll be offered work and not be able to accept it in particular months if you're too busy with other things). This isn't really an IR35 decision (as with pretty much all contracts), the only question is whether it's a good business decision. For a commitment of only 4 days per month, I'd take it - you can fit this in around other work, I'm sure.

[TheCyclingProgrammer]

FWIW, I agree. You only need to demonstrate one of the three convincingly, and I wouldn't identify MoO (alone) as the best foundation (in any case, there's a good chance that you'll be offered work and not be able to accept it in particular months if you're too busy with other things).

Part of the agreement would be that I would be contractually obliged to be available for 4 days in a month no matter how busy I am although of course being able to push some days back to the following month does give me a bit of flexibility here.

This isn't really an IR35 decision (as with pretty much all contracts), the only question is whether it's a good business decision. For a commitment of only 4 days per month, I'd take it - you can fit this in around other work, I'm sure.

I agree, I think 4 days a month is more than manageable.

The client has sent me over their draft agreement with their end client and it all looks reasonable; a few issues to resolve around response times for certain issues and notice periods but nothing major. It also looks like the deal will be a 12 month one - I'm not going to forgo nearly £30k of potential business over some (what I now think are relatively minor) IR35 concerns.

Just need to renegotiate my rate as I put my rate up in January but have been charging them my old rate up until this point.

Thanks for all the input everyone!

[TheCyclingProgrammer]

Just thought I'd provide one last update on this - using my own contract and schedule as a basis, with some ideas gleaned from my client's contract with their client, I was able to draft a schedule agreement that both I and my client were very happy with.

For a belt and braces approach I submitted this over to QDOS for a contract assessment along with one of their working practices questionnaires and it today came back as a pass, with nearly flying colours.

One of the few negative points was the notice period on my side being longer than 30 days (I've actually specified my notice as one full "retainer period" so it could be anywhere from 30-60 days depending on when I give notice). However I felt this seemed like fair notice to me. I've stipulated that the client can terminate at any time with the contract then ending at the end of the retainer period in which they give notice (so their notice period is anywhere from 0-30 days really) - they pay in advance for each month so they get to use it if they've paid (no refunds).

So all good in the end! If anybody wants an anonymised copy of the schedule I drew up I'm happy to share it, but it is designed to be used in conjunction with the master service agreement which I'm not going to share as its a PCG template. I'm not sure you can copyright contracts but I feel like if you want it, you should sign up for the PCG.