Reply to: Agency Regulations and conflicting contract clauses

[JoJoGabor]

Update: The agent coughed up in the end after I responded to each of their points in the claim that there was no legal standing.

I think they were bluffing and realised they had nowhere to go.

[Safe Collections]

@Safe Collections - is this something you could handle to claim for my last invoice or does the counter claim issue complicate things and is more suitable to be represetnted by a solicitor?

The short answer is yes we could handle it, the long answer is still yes, but it will depend on reviewing the background of the claim and the nature of the agreement etc etc...

Feel free to get in touch for a chat

[JoJoGabor]

@Safe Collections - is this something you could handle to claim for my last invoice or does the counter claim issue complicate things and is more suitable to be represetnted by a solicitor?

[Safe Collections]

But it's not a brand new company. You said it was bought. That tends to include assets and liabilities no?

Depends on the nature of the sale. The new consultancy could have purchased just the assets and left the administrators with the liabilities.

[northernladuk]

No they're not legally obliged to do anything, brand new company. I went direct to the end client, not via any consultancy

But it's not a brand new company. You said it was bought. That tends to include assets and liabilities no?

[JoJoGabor]

If you had stayed with the consultancy wouldn't the new one be obliged to pay you as they take on their business inc liabilities?

No they're not legally obliged to do anything, brand new company. I went direct to the end client, not via any consultancy

[northernladuk]

If you had stayed with the consultancy wouldn't the new one be obliged to pay you as they take on their business inc liabilities?

[tractor]

...

Since any IR35 charges are down to you personally, not the client and not the agency, perhaps ask them just what they think they are asking you to pay them for, since they will not have any liabilities in respect of IR35 and income taxes. But you ain't going to protect them from bankruptcy costs, that's their risk.

I suspect the clause alludes to the 'False Self Employment' issue that HMRC has created and although of course it has yet to be tested, it is quite conceivable that they would try to transfer liability in the case where someone is retrospectively assessed and cannot come up with the loot.

Given the usual agency inability or reticence to draft proper contracts, the 'one size' fits all contract that they try to use would give rise to these peculiar ambiguities.

[JoJoGabor]

That looks like a very badly-worded clause that I'd be trying to take out. It says that you are indemnifying them against any losses incurred by a third party. I'd guess that they meant HMRC (or any such body) for any taxes, but it's so badly worded that it says "including specifically, but without limitation..." which opens you up to anything and everything.

Probably wouldn't stand up in court because of that, but it's gibberish that opens you up to significant liabilities.

Well that's my issue, this is an old contract and the agency is now claiming against losses by using this clause, but see my post above, I am interpretting this as meaning IR35 and employment related losses, but it can be read as you stated. Also it states "Losses incurred by any proceedings by any third party. Does the client going into administration count in this statement?

However backed up with the optin to Agency Conduct Regs and the clause stating they must pay even if the client doesn't pay, I am hoping it fairly clear.

[TheFaQQer]

Thanks for your replies, after reviewing the contract, I am definitely opted-in to the Agency Conduct Regulations 2003
The one clause I need confirmation with is:

The Consultancy shall indemnify and keep indemnified the Employment Business against any Losses suffered or incurred by the Employment Business by reason of any proceedings, claims or demands by any third party (including specifically, but without limitation, Her Majesty’s Revenue and Customs and any successor, equivalent or related body pursuant to the IR35 Legislation and/or any of the provisions of Chapter 9 and/or section 688A of the Income Tax (Earnings and Pensions) Act 2003 and/or any supporting or consequential secondary legislation relating thereto).

My translation of this is: I am indemnifying the agency against any loss with regards to IR35, Chapter 9 Bankruptcy (which is US public organisations only only) and Income Tax Liabilities. However does this also include the client going in administration?

That looks like a very badly-worded clause that I'd be trying to take out. It says that you are indemnifying them against any losses incurred by a third party. I'd guess that they meant HMRC (or any such body) for any taxes, but it's so badly worded that it says "including specifically, but without limitation..." which opens you up to anything and everything.

Probably wouldn't stand up in court because of that, but it's gibberish that opens you up to significant liabilities.

[malvolio]

Thanks for your replies, after reviewing the contract, I am definitely opted-in to the Agency Conduct Regulations 2003
The one clause I need confirmation with is:

The Consultancy shall indemnify and keep indemnified the Employment Business against any Losses suffered or incurred by the Employment Business by reason of any proceedings, claims or demands by any third party (including specifically, but without limitation, Her Majesty’s Revenue and Customs and any successor, equivalent or related body pursuant to the IR35 Legislation and/or any of the provisions of Chapter 9 and/or section 688A of the Income Tax (Earnings and Pensions) Act 2003 and/or any supporting or consequential secondary legislation relating thereto).

My translation of this is: I am indemnifying the agency against any loss with regards to IR35, Chapter 9 Bankruptcy (which is US public organisations only only) and Income Tax Liabilities. However does this also include the client going in administration?

I also have the clause:
Subject to the Consultancy complying with the provisions of this clause x the Employment Business shall pay the Consultancy for all hours worked regardless of whether the Employment Business has received payment from the Client for those hours.

I think that's pretty clear cut. What are your thoughts?

Since any IR35 charges are down to you personally, not the client and not the agency, perhaps ask them just what they think they are asking you to pay them for, since they will not have any liabilities in respect of IR35 and income taxes. But you ain't going to protect them from bankruptcy costs, that's their risk.

[JoJoGabor]

Thanks for your replies, after reviewing the contract, I am definitely opted-in to the Agency Conduct Regulations 2003
The one clause I need confirmation with is:

The Consultancy shall indemnify and keep indemnified the Employment Business against any Losses suffered or incurred by the Employment Business by reason of any proceedings, claims or demands by any third party (including specifically, but without limitation, Her Majesty’s Revenue and Customs and any successor, equivalent or related body pursuant to the IR35 Legislation and/or any of the provisions of Chapter 9 and/or section 688A of the Income Tax (Earnings and Pensions) Act 2003 and/or any supporting or consequential secondary legislation relating thereto).

My translation of this is: I am indemnifying the agency against any loss with regards to IR35, Chapter 9 Bankruptcy (which is US public organisations only only) and Income Tax Liabilities. However does this also include the client going in administration?

I also have the clause:
Subject to the Consultancy complying with the provisions of this clause x the Employment Business shall pay the Consultancy for all hours worked regardless of whether the Employment Business has received payment from the Client for those hours.

I think that's pretty clear cut. What are your thoughts?

[malvolio]

If you are opted into the agency regulations, then they MUST pay you what they owe you -

They mustn't, actually, if you've signed a contract saying they don't have to...

if they have any counter claim, then they need to take a separate legal action against you to recover their losses.

Yes, I agree. The two arguments are entirely separate.

How long was there between leaving the consultancy and going to the client? If it was more than eight weeks, then you are in the clear anyway, since you opted into the agency regulations and they cannot make a charge for your services any more.

Send them a letter pointing this out, or get a solicitor to do it for you, and then chase for late payment and penalties.

...having first read your contract carefully!

[tractor]

.....

If you are opted into the agency regulations, then they MUST pay you what they owe you - if they have any counter claim, then they need to take a separate legal action against you to recover their losses.

How long was there between leaving the consultancy and going to the client? If it was more than eight weeks, then you are in the clear anyway, since you opted into the agency regulations and they cannot make a charge for your services any more.

Send them a letter pointing this out, or get a solicitor to do it for you, and then chase for late payment and penalties.

It's 14 weeks from the start of the contract or 8 weeks from the end, whichever is the later. I think it's Regulation 10 of the Conduct Regs.

[TheFaQQer]

If you are opted into the agency regulations, then they MUST pay you what they owe you - if they have any counter claim, then they need to take a separate legal action against you to recover their losses.

How long was there between leaving the consultancy and going to the client? If it was more than eight weeks, then you are in the clear anyway, since you opted into the agency regulations and they cannot make a charge for your services any more.

Send them a letter pointing this out, or get a solicitor to do it for you, and then chase for late payment and penalties.