IR35 - Key Personnel clause

[techforumxyz]

Hi All,

I am an IT contractor with my own limited company (PSC).
The contract with an EU client, has the below clauses:

"
The Contractor shall ensure that those Personnel listed in a Service Schedule as “Key Personnel”
shall be engaged solely on Services for the agreed periods of time as set out in the Service
Schedule.

No Key Personnel may be removed from the Services without the prior written agreement of
the agency except for cases of illness, resignation or force majeure leave. In the event that agency
does agree to the removal of Key Personnel, the Contractor shall use its best endeavours to
ensure that such Key Personnel are replaced by persons of similar experience, qualification and
competence without delay. Should the agency be dissatisfied for any reason with the replacement
personnel it may terminate the relevant Service Agreement forthwith pursuant to clause 2.
The Contractor must seek the prior consent of the client before any Key Personnel take planned
absences during a Term, and must notify their designated contact in the agency.
"

They have entered my name as the key person. Does this place my contract inside IR35? If yes, then please advise me how to keep it outside IR35.

Thanks,
Abd

[eek]

That Personnel clause has nothing to do with IR35.

It may have a slight impact on substitution (which would be an issue if that was the only basis of you being outside IR35) but I doubt it.

What does the company you employed to check the contract say (you did get someone like QDOS to review the contract).

[jamesbrown]

A Key Personnel clause is extremely common in a B2B contract and does not, in itself, imply personal service. However, you will need to get the contract and working practices reviewed in the round.

[techforumxyz]

A Key Personnel clause is extremely common in a B2B contract and does not, in itself, imply personal service. However, you will need to get the contract and working practices reviewed in the round.

Thanks for replies.
Can you please advise about the below clause in the contract? Do we need to amend the below?


"This contract shall only become valid and executed following written approval that the background
/screening checks undertaken by our nominated partner for all Key Personnel who will carry out
work under this agreement have been successful and are acceptable to the client, in this case
ABC Limited. The Agency will be under no obligation to offer any alternative work or any
compensation whatsoever to the Contractor or any Key Personnel should the result of the checks
be unsatisfactory or incomplete resulting in the key personnel of the Contractor being unable to
commence work on the client site."

[eek]

Thanks for replies.
Can you please advise about the below clause in the contract? Do we need to amend the below?


"This contract shall only become valid and executed following written approval that the background
/screening checks undertaken by our nominated partner for all Key Personnel who will carry out
work under this agreement have been successful and are acceptable to the client, in this case
ABC Limited. The Agency will be under no obligation to offer any alternative work or any
compensation whatsoever to the Contractor or any Key Personnel should the result of the checks
be unsatisfactory or incomplete resulting in the key personnel of the Contractor being unable to
commence work on the client site."

Get a lawyer to look at it, not some random people on the internet.

[jamesbrown]

From an IR35 POV? No, I don’t see any issues there since screening will apply equally to anyone working on the client site, i.e., it is neutral w/r to IR35.

However, you really should follow my earlier advice and get the contract and WP professionally reviewed, both for IR35 and commercial terms. Having individual clauses reviewed by random people on t’interweb really is next to useless.

[northernladuk]

From an IR35 POV? No, I don’t see any issues there since screening will apply equally to anyone working on the client site, i.e., it is neutral w/r to IR35.

However, you really should follow my earlier advice and get the contract and WP professionally reviewed, both for IR35 and commercial terms. Having individual clauses reviewed by random people on t’interweb really is next to useless.

And get a much better grasp of the basics so you can at least begin to understand where it applies and where it doesn't

[CatOnMat]

Hi All,


No Key Personnel may be removed from the Services without the prior written agreement of
the agency except for cases of illness, resignation or force majeure leave. In the event that agency
does agree to the removal of Key Personnel, the Contractor shall use its best endeavours to
ensure that such Key Personnel are replaced by persons of similar experience, qualification and
competence without delay. Should the agency be dissatisfied for any reason with the replacement
personnel it may terminate the relevant Service Agreement forthwith pursuant to clause 2.
The Contractor must seek the prior consent of the client before any Key Personnel take planned
absences during a Term, and must notify their designated contact in the agency.
"

This bit in partcular smacks of Direction & Control to me - on a previous contract which I had reviewed by Qdos at the time I had something similar which I pushed back on the agency to get changed to something along the lines of "as a professional courtesy will inform the client as early as practical of any periods where key staff may be unavailable" rather than basically agreeing that I had to have someone agree my holiday/absence days as if I'd been an employee...

Like others I suggest you get the contract reviewed professionally and/or get IR35 insurance (which often comes with review(s) thrown in anyway).

HTH

[northernladuk]

This bit in partcular smacks of Direction & Control to me - on a previous contract which I had reviewed by Qdos at the time I had something similar which I pushed back on the agency to get changed to something along the lines of "as a professional courtesy will inform the client as early as practical of any periods where key staff may be unavailable" rather than basically agreeing that I had to have someone agree my holiday/absence days as if I'd been an employee...

Like others I suggest you get the contract reviewed professionally and/or get IR35 insurance (which often comes with review(s) thrown in anyway).

HTH

I'm not so sure. It states the contractor I. E. The business. I think you are getting the term contractor wrong an you are thinking you as a person are a contractor. This is one level up that the Ltd must speak to the client before abscence, not the named individual.

Now if the key personnel had to ask permission then there could be a problem but it doesn't say that. IR35 applies to the person not the business.

[jamesbrown]

It's pretty standard for a Key Personnel clause in my experience. The whole point of these clauses is that they don't want Key Personnel being ditched or replaced or taking long leaves of absence halfway through a project because it's disruptive to their business. However, it will definitely need to be reviewed by a professional alongside the rest of the contract. Note that my confident assertion is about the follow-up question on screening/background checks, which is neutral from an IR35 POV, not about the clause overall, which needs to be reviewed alongside the other terms.