Terminology in the "Parties" section of a contract and IR35

[GlasgowDev]

I'm looking for some advice regarding a term used in a contract that I've been provided.

In the introductory "Parties" section of the contract the agency have described themselves as "the employment business". Immediately I wasn't happy with the terminology as I'd assume that this implies I'm engaging with them on the basis of an "employment" rather than providing a consultancy service?

For background purposes, the agency have only previously dealt with PAYE based short-term contracts. This is the first time they have supplied an outside Ltd company based resource to the client for a specific project objective.

I've debated the point with the agency, agreeing that it is simply a document reference. However, my opinion is that as IR35 investigations are subjective it is therefore not acceptable to have any questions hanging over my head regarding the nature of my engagement.

Can anyone provide some feedback on the actual impact of this?

[northernladuk]

Get it reviewed by QDOS or B&C and let a professional advise you.....

[GlasgowDev]

Thanks, I should have mentioned that this is exactly what I'm intending to do.

I'd still like to know what everyones opinions are on this though as I'd like to know if I'm overstating the impact of the term.

[SueEllen]

Thanks, I should have mentioned that this is exactly what I'm intending to do.

I'd still like to know what everyones opinions are on this though as I'd like to know if I'm overstating the impact of the term.

I refer you to this legislation and this pdf

Enjoy the read.

Also I suggest you read the opt-in/opt-out thread afterwards.

[DirtyDog]

I've debated the point with the agency, agreeing that it is simply a document reference.

Well, that's wrong for a start - Employment Business and Employment Agency are two distinct things, which should not be confused:

Employment business
Defined under the Employment Agencies Act 1973 as the business of supplying people in the employment of the person carrying on the business, to act for, and under the control of, other people in any capacity. This covers the hiring out of workers on a temporary basis and is frequently called "temping". It has long been associated with the supply of temporary secretarial and other office staff, but has extended into many other areas, including professional and industrial occupations.

Employment businesses are referred to as "temporary work agencies" in the Agency Workers Regulations 2010 (SI 2010/93) and are otherwise frequently referred to as "agencies", "temp agencies" or "employment agencies", and the workers they supply as "agency workers". This can lead to confusion between an organisation that is acting as an employment businesses and one that is truly acting as an employment agency.

Employment agency
Commonly known as a recruitment agency, an organisation involved in "providing services (whether by the provision of information or otherwise) for the purpose of finding workers employment with employers or of supplying employers with workers for employment by them" (section 13(2), Employment Agencies Act 1973). This definition applies to a wide range of agencies, from the familiar recruitment agency, through a range of specialist agencies to entertainment and modelling agents, the executive selection functions of management consultants and executive search consultants.

It is a distinct concept from that of an employment business, but the term "employment agency" is sometimes used in common parlance to refer to both types of organisation.

[GlasgowDev]

Thanks for this, it certainly helps clarify where the term has come from. It would seem that "employment business" in this case concerns the supply of "agency workers".

Would being a limited company engaging on the basis of providing services for a client project, through an "employment business" therefore be safe with regards to IR35? I'm pretty happy that the actual working practices and other terms in the contract are explicit that I wouldn't be engaging in an employee role with the client

Well, that's wrong for a start - Employment Business and Employment Agency are two distinct things, which should not be confused:

Employment business
Defined under the Employment Agencies Act 1973 as the business of supplying people in the employment of the person carrying on the business, to act for, and under the control of, other people in any capacity. This covers the hiring out of workers on a temporary basis and is frequently called "temping". It has long been associated with the supply of temporary secretarial and other office staff, but has extended into many other areas, including professional and industrial occupations.

Employment businesses are referred to as "temporary work agencies" in the Agency Workers Regulations 2010 (SI 2010/93) and are otherwise frequently referred to as "agencies", "temp agencies" or "employment agencies", and the workers they supply as "agency workers". This can lead to confusion between an organisation that is acting as an employment businesses and one that is truly acting as an employment agency.

Employment agency
Commonly known as a recruitment agency, an organisation involved in "providing services (whether by the provision of information or otherwise) for the purpose of finding workers employment with employers or of supplying employers with workers for employment by them" (section 13(2), Employment Agencies Act 1973). This definition applies to a wide range of agencies, from the familiar recruitment agency, through a range of specialist agencies to entertainment and modelling agents, the executive selection functions of management consultants and executive search consultants.

It is a distinct concept from that of an employment business, but the term "employment agency" is sometimes used in common parlance to refer to both types of organisation.

[northernladuk]

Thanks for this, it certainly helps clarify where the term has come from. It would seem that "employment business" in this case concerns the supply of "agency workers".

Would being a limited company engaging on the basis of providing services for a client project, through an "employment business" therefore be safe with regards to IR35? I'm pretty happy that the actual working practices and other terms in the contract are explicit that I wouldn't be engaging in an employee role with the client

Nope. It's the standard method we use. Client->agent->contractor. IR35 is how you are viewed in HMRC's eye. You could be through 10 agencies but if you are being treated as an employee by the client but you are telling HMRC you are Company you have an IR35 issue. It's very complex and there is no silver bullet for IR35 so you just have do the best you can to make sure the contract has been checked by IR35 specialist and that your working practices are outside. Possibly get them reviewed by the likes of QDOS as well as a letter of confirmation.

[GlasgowDev]

Perfect, thanks to everyone so far for their input.

Nope. It's the standard method we use. Client->agent->contractor. IR35 is how you are viewed in HMRC's eye. You could be through 10 agencies but if you are being treated as an employee by the client but you are telling HMRC you are Company you have an IR35 issue. It's very complex and there is no silver bullet for IR35 so you just have do the best you can to make sure the contract has been checked by IR35 specialist and that your working practices are outside. Possibly get them reviewed by the likes of QDOS as well as a letter of confirmation.