IR35 and dodgy right of substitution clause

[The Wikir Man]

This is a right of substitution clause from my agency contract (not signed it yet). It says the client can veto a substitute for any reason and when I asked they won't change it to for a valid reason based on experience, qualifications etc. Do you think as it stands it will be outside IR35 if the taxman comes knocking??

e) The Contractor may engage or contract any other person or entity to perform the Services in place of the Worker provided the Client is made aware of this and the Contractor receives the prior written consent of the Client. The Client reserves the right to decline or refuse such a request for any reason whatsoever.

Don't like it one little bit, in terms of trying to defend an IR35 investigation if that took place.

Ideal replacement would be (IMO)

e) The Contractor may engage or contract any other person or entity to perform the Services in place of the Worker provided the Client is made aware of this and the Contractor receives the prior written consent of the Client, which will not be unreasonably withheld.


Whilst not impossible to defend an IR35 investigation with the contract like this (since they would look at actual working practices), I wouldn't want to fight it on this. You only need the client to say "well, we'd never have allowed a substitute anyway..." and you're screwed (but that applies to whatever the contract wording says).

[mobwell]

If I compare either my old contract with the agency SRG or PCG's with the new agency contract with 3i there is an obvious weakening of my position with regards to IR35 if I can't get the right of substitution clause modified.
They seem completely against any changes whatsoever to the contract. I may have to see if I can change agencies. It's just very useful to hear other people's opinions before I take this big step. So anymore thoughts would be appreciated.


3i
a) The Contractor may engage or contract any other person or entity to perform the Services in place of the Worker provided the Client is made aware of this and the Contractor receives the prior written consent of the Client. The Client reserves the right to decline or refuse such a request for any reason whatsoever.


SRG
The Supplier shall not be bound hereunder or otherwise to render personal services to the client but may at his absolute discretion engage or appoint another person or other persons (the substitute) to render the required services in his stead. The Supplier agrees to ensure that any substitute will be suitably qualified and SRG Interesource is entitled to reject any substitute should the work required under the terms of agreement not be carried out by the substitute to the standards or performance required.


PCG
1.1 Where a Schedule names any personnel who are to provide the Services, or where the Client has a reasonable expectation that the Services will primarily be provided by a specific individual, the Service Provider is responsible for maintaining reasonable continuity, but nevertheless reserves the right to substitute (and, if so required by the Client on reasonable grounds, will substitute) other personnel of equivalent expertise.
1.1.1 The Service Provider acknowledges that the Client has the right, under its contract with the Agency, to refuse to accept Services from any personnel on reasonable grounds related to security, qualifications or expertise.

[Qdos Contractor]

That's not very good at all and would definitely cause problems in an enquiry. Obviously the written contract is only part of it and your actual working practices would also be scrutinised, but substitution is so hypothetical that its nice to have a decent clause backing it up.

Try to get them to change it to something like:

The Contractor may engage or contract any other person or entity to perform the Services in place of the Worker provided the Client is made aware of this. The Client reserves the right to decline or refuse any potential replacement on grounds of skills, qualifications or experience.

Doesn't really alter the meaning of the clause, but drastically improves it from an IR35 perspective.

[centurian]

Agreed - that ROS is pretty useless.

However, even if you do get it changed, it's equally useless if the upper contract (the one between the agency and ClientCo) has a similar clause - and that's a contract you'll never get to see.

That was one of the main reasons Dragonfly lost.

[lxt04]

That is somewhat dodgy. Most substitution clauses require the client to not unreasonably withhold consent.

That said, it would be unusual for 'unreasonable consent' to be explicitly defined in a contract.

[mobwell]

This is a right of substitution clause from my agency contract (not signed it yet). It says the client can veto a substitute for any reason and when I asked they won't change it to for a valid reason based on experience, qualifications etc. Do you think as it stands it will be outside IR35 if the taxman comes knocking??

e) The Contractor may engage or contract any other person or entity to perform the Services in place of the Worker provided the Client is made aware of this and the Contractor receives the prior written consent of the Client. The Client reserves the right to decline or refuse such a request for any reason whatsoever.