SDC reporting warranty
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  1. #11

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    Quote Originally Posted by supersteamer View Post
    She’s not a PM - she’s a developer working on a project to speed up some reporting jobs and knows not to stray off the reservation onto anything else.
    Isn't that even worse as they could be directed which bit of work to do when and change that depending on how the project is going?

    Didn't we have a debate around whether Agile is SDC?
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    Quote Originally Posted by supersteamer View Post
    Further to clause x.x, the Consultancy warrants that the Consultancy Staff do not work under (or are not subject to the right of) supervision, direction or control of any person as to the manner in which they provide the Consultancy Services. The Consultancy further warrants that it shall advise the Employment Business in writing immediately that the Consultancy Staff work under (or are subject to the right of) supervision, direction or control of any person.
    I would feel very uncomfortable with that wording - because she may be working under SDC but not be aware of it.

    Without knowing the rest of the contract it's impossible for anyone to really have an opinion about what the liabilities may be - I would see what any lawyers think about it. I'm presuming that it's too late to change it if she's accepted it, but even something along the lines of "The Consultancy further warrants that it shall advise the Employment Business in writing immediately that the Consultancy Staff become aware that they are working under (or are subject to the right of) supervision, direction or control of any person." which gives a bit more wriggle room.

    As NLUK says, it's a grey area and trying to pin the blame on the consultancy to keep checking this would be something I'd be very wary of.
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    Thanks - does sound bad. And completely undermines the “clarity” that ESS was meant to bring to the process.

    However - what’s the worst that can happen? If the agency claim for damages it can only be because the contract is inside IR35 (the agency will not suffer a loss if she does not report SDC but the contract is still outside of IR35). If inside then the ESS has been completed incorrectly (the ROS is not real) so she could raise a counter claim against the agency for wrongly informing her the contract was outside IR35 for this reason when she accepted it?

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    Quote Originally Posted by supersteamer View Post
    However - what’s the worst that can happen?
    Her boss could murder her.

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    Quote Originally Posted by northernladuk View Post
    If she is outside IR35 that would have to be suicide as she’s her own boss. A bit of a drastic solution I would have thought but I will suggest it. Any other less desperate prospects for mitigating the risk given the contract is already in force? Would PI insurance cover a claim under this clause?

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    Quote Originally Posted by supersteamer View Post
    Thanks - does sound bad. And completely undermines the “clarity” that ESS was meant to bring to the process.

    However - what’s the worst that can happen? If the agency claim for damages it can only be because the contract is inside IR35 (the agency will not suffer a loss if she does not report SDC but the contract is still outside of IR35). If inside then the ESS has been completed incorrectly (the ROS is not real) so she could raise a counter claim against the agency for wrongly informing her the contract was outside IR35 for this reason when she accepted it?
    CEST being completed and giving an incorrect outside determination is something that agencies worry about - because they have no input into the process but still get hit with the costs if the PSB does it incorrectly.

    My gut instinct on the contract is that this is an attempt to try to hedge their bets so that they can push some of that liability onto the client - because to fail IR35 you need to have failed all three pillars of employment, which means that you must have been subject to SDC. And if you didn't tell them that you were inside SDC, you've breached the contract.

    But I'm failing to see how there could be a counterclaim because she isn't any worse off as a result of the contract being wrongly classified (PAYE and NI will be paid by the fee payer) - the only thing that makes her potentially worse off is because she breached the SDC clause, didn't tell the agency, and now they are suing for breach.

    That said, I think that with the right legal representation the chances of liability being pushed from agency onto contractor for the PAYE and NI would be low.
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  7. #17

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    Quote Originally Posted by northernladuk View Post
    What type of work she doing?

    The above clause assumes the contractor has a very good understanding of a very grey area. If she's a PM she's going to fail it the minute the client offers her a new project but I bet she doesn't know that.
    Always bemuses me this (probably my lack of understanding), but how does being offered a new project (a) fail IR35 (b) constitute any part of SDC?

    I ask, because 'offering' is just that i.e. not direction and control, and can therefore be refused.

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    Quote Originally Posted by gables View Post
    Always bemuses me this (probably my lack of understanding), but how does being offered a new project (a) fail IR35 (b) constitute any part of SDC?

    I ask, because 'offering' is just that i.e. not direction and control, and can therefore be refused.
    OK. They are given a new project and they start work on it then.

    That said the fact the client offers it means they see you under their Direction and Control so you fail. The working practices demonstrate SDC.
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    Quote Originally Posted by TheFaQQer View Post
    But I'm failing to see how there could be a counterclaim because she isn't any worse off as a result of the contract being wrongly classified (PAYE and NI will be paid by the fee payer) - the only thing that makes her potentially worse off is because she breached the SDC clause, didn't tell the agency, and now they are suing for breach.
    This is exactly what she’s worried about. The agency could claim damages for all PAYE and NI despite the fact she’s already paid her taxes for the contract. Plus agency legal expenses and possibly interest. Could be very expensive.



    That said, I think that with the right legal representation the chances of liability being pushed from agency onto contractor for the PAYE and NI would be low.
    How would she get legal representation for this?

    I know some insurance providers post on here - would they care to commit to covering claims against this clause on their PI or other insurance products? She’s s bit worried now so there may be business in it for you!

    Incidentally I’ve asked around and similar clauses appear in a few people’s contracts -doesn’t seem to be isolated to one agency.

  10. #20

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    Quote Originally Posted by northernladuk View Post
    OK. They are given a new project and they start work on it then.

    That said the fact the client offers it means they see you under their Direction and Control so you fail. The working practices demonstrate SDC.
    That is quite different (in bold).

    I find it interesting on how we interpret things; to me an offer (which is a request to work on something else) does not indicate a client sees me under direction and control, in fact I'd argue the opposite. Because if it was D&C I'd be getting told what to work.

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