Simple retainer agreement?

[TheCyclingProgrammer]

Has anybody here managed to come up with an ongoing retainer/support agreement for clients? A client I did a lot of work for over the last year has proposed it to me and asked me how I'd like it to work and I'm not completely sure about the best way to structure it.

In short, they want some way of being able to get a couple of days of my time each month, at reasonably short notice. I'll still be working on other projects for other clients. Currently I'm thinking that they would pay MyCo a retainer each month for up to x number of days on a "use it or lose it" basis. Any additional work would be billed at my normal day rate, availability permitting. Is there a better way of doing this?

Also, are there any strong IR35 implications of this kind of arrangement? I imagine there doesn't have to be as long as the terms are worded carefully. Previous contract was completely outside of IR35 and I have no worries re: direction and control and my contract (PCG template based) has a strong substitution clause however this does potentially create some MOO issues. Could these be avoided by simply stating that if MyCo is unable to provide the retained services, that the retainer for that month would not be payable? Or do I not need to worry about MOO at all given the other two big points are in my favour?

[LisaContractorUmbrella]

There's a sample doc here: www.ipo.gov.uk/lambert-sample-consultancy-agreement.doc if that's any help. I think the MOO issue would be something you'd need to look at

[TykeMerc]

I have done this in the past with a couple of clients, in my opinion IR35 wise it's not a bad thing as it's a reasonably typical piece of business to business practice.
Another option is to have a calloff days contract where you agree a minimum number of days that will be charged, can invoice it all up front if you want to arrange it that way or on some schedule, it's very easy to structure a contract in a clearly business manner.

[craig1]

The way I've done it in the past for non-retainer work is to have it essentially written as a zero hours master services contract with firm SLAs in it that has individual bits of work done as specifically worded email schedules. Firm statements of no obligation to do work, no breach of contract if work is declined and statements of fees. For example, one consultancy situation I did had a set daily rate with pre-agreed steps of discount for extra work, if they gave me over 10 days of work in a calendar year then 10%, 20 days at 15% and so on; I worked on the premise that I start high in my price and discount down to encourage greater use of my time.

If you're going into the retainer business though where you're essentially obliged to take work given it's important that you get written SLAs fully negotiated in advance so that they understand that just because they snap their fingers you aren't going to turn up the same day. What suits you? Can you do a day or so here and there? What if they want you for a week? What about a month? How credible is your substitution right in reality?

[jamesbrown]

Here's some relevant discussion for you:

Retainer Fees and IR35 - Contractor Weekly

On the whole, I don't think IR35 is your main concern, assuming D&C is limited. However, I would think carefully about whether it's worth the hassle. I'd be looking for an effective T&M rate way above my ordinary day rate to complete ad hoc work on short notice, as it's quite disruptive. Depending on the nature of the support, you may want to consider collecting issues and addressing them periodically on a fixed price basis, i.e. not be "on call".

[vwdan]

I'll be watching this thread closely - I've currently got an agreement with a company who have offered to pay me a retainer. I'm pretty sure I'm sat out of IR35 because I'm still choosing which work to take (They send me an e-mail saying "Fancy this" and I say yay or nay) and there's almost no interaction beyond that (No D&C whatsoever) and I'm actually on site with another client altogether this week which, IMHO, proves I'm trying to operate as a real business.

I quite like the sound of Craig 1's approach though - I probably need to formalise the arrangement a little more going forward, but the initial contract was very short term so I ran with it to see how it'd go.

[TheCyclingProgrammer]

Just thought I'd bump this as my client is still very keen to come to some kind of arrangement with me. They are happy for our agreement to mirror whatever agreement they come to with their end client, even going as far as to offer to send me over the agreement to reuse between us (and take any input I might have when drafting it).

What they essentially want from me is a commitment for a maximum of 4 days/month which I would presumably bill them for whether they use those days or not - so they are essentially paying for my time whether or not I do any work; in return I keep some time available and make my other clients aware that I require this flexibility (which shouldn't be a problem). A fairly standard retainer agreement.

They have told me that when they have engaged in similar contracts with their clients before, they normally have a clause that lets them reallocate some of a months time by pushing it back or forward a month to allow greater flexibility on either side.

My current thinking is that whilst all of this creates some implications from a MOO point of view, I feel fairly covered when it comes to D&C. The scope of any work requested will be limited to a very specific project and as has been the case up to now, I will be left to myself to best decide on how the work should be performed - they have no expertise in this particular area. I have always been treated like a consultant by the client, never like an employee. I use a variation of the PCG contract which contains a good substitution clause although I've never had cause to use it - perhaps re-emphasising this in any agreement would be a good idea?

It seems like I would be silly to turn this down over some IR35 concerns - something that normally doesn't concern me because all of the work I do is pretty squarely outside of IR35 scope.

Is there anything else I can do to make this kind of agreement work and try and keep it from falling foul of IR35? My main concern is the obligation to provide services that is created by the retainer but if I've got the other bit IR35 pillars covered, then that should be fine, right?

[TheCyclingProgrammer]

Further to the above - I've emailed my accountant for his opinions on this and I'll likely get any schedule/agreement reviewed by QDOS (not something I'd normally bother with as my contracts are fairly standard normally).

It's got me thinking though...MyCo currently pays my accountant's LtdCo a fixed monthly fee for accountancy services. For this fee, my accountant provides me with accountancy support and advice as well as end of year accounts/tax return services etc. Is this really any different? By paying him £x/month there is an obligation for him to provide his services within the scope of our agreement. But I don't think anybody would be trying to argue that he is a disguised employee of MyCo. He's a one man company as well (and I'm pretty sure his agreement contains a RoS clause too).

[northernladuk]

Don't you pay your accountant a yearly fee that is broken down in to monthly payments?

[northernladuk]

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 .