Reply to: Notice period issue/argument

[ecc83]

Some interesting stuff in this thread. My current contract consists of a master contract and a schedule. The master contract is in effect for a fixed period of time, and has stuff in it about termination, but in and of itself - quite explicitly - does not guarantee any work. That comes from "orders" in the "schedule".

Now presumably, the interpretation of "notice" and termination would depend on the wording of the schedule? If for example it said "provide services on project Foo" - then as long as project Foo is active, I could reasonably expect to be billing my services on a daily rate, as the master contract states. And if the client wanted to terminate - at 5 days notice as specified, for whatever reason, other than Project Foo being cancelled - then could I reasonably expect to be paid for those 5 days? On the other hand, if Project Foo is canned, then the master contract can be terminated, but I can have no expectation of payment.

Similarly, if the schedule said "Implement Bar and Baz on project Foo" - and the client decides that Bar was a duff idea all along, bins it, and reassigns Foo to a permie - then again, no matter what the termination clause, I can have no expectation of getting paid.

That's the opinion that I've formed in my extensive contracting career of 4 WEEKS (incorporate my co. on June 10) so might be barking entirely up the wrong fish. But something I've been thinking about is the wording of such schedules - the more open ended they are, the more inside IR35 they become (aww, come in on Monday, we'll find you SOMETHING to do). On the other hand, who wants to sign a contract that could have you (in theory) working a two day week... or worse?

[RockyBalboa]

The agency stated that they have 5 days notice in their contracts with the PSL.. so I can bet they are claiming for that and fobbing me off with 0.

I have picked up another role anyway, however, I don't like how the agency has behaved in all this so I shall be pursuing it - and PCG Tax/Legal have advised me to try pursuing it. I shall give it a go and report back.

[rd409]

I agree. Luckily for us not many clients have actually picked up on this or are not tough enough to carry it out. We are on 4 weeks notice here and they finished one of the BA's and gave her 4 weeks paid gardening leave Now there is something I didn't think I would see as a contractor. Definately not complaining though.

If more picked up on this they yes notice period would become even more irrelavent than it is now.

Well, if the contractor is not paid for the notice period, then the agency will not get their commission either. So essentially, this is the only reason, this clause is not exercised by the client more often. Also no contractor will want to burn the bridges, so they do not exercise this clause as well on their clients.

[Hex]

I think there should definitely be no mutuality of obligation in a contract. If there isn't then that reduces your chances of being Outside IR35. To have no mutuality of obligation the contract should have terms that say that there is no obligation on the client to provide you with work during the contract period and there is no obligation on you to accept work that is offerered other than that detailed in the Schedule to the contract.

Your contract will usually have a start and end date and will detail the terms under which any services will be supplied during that period. That will include things like the rate.

When the contract expires you can renegotiate, maybe increase the rate.

Contracts also quite often have notice periods. If a party has a notice period then they can give notice to the other party that they wish to terminate the contract and will no longer provide services under that contract. This would then give that party the opportunity to renegotiate a new contract earlier than would otherwise be possible - without having to wait for the end of the contract. They may also want to give notice to make it clear that no more work will be required or supplied for the remainder of the contract. In this case they could just let the contract run to its end, but it may clearer to just give notice of termination.

My contract gives the client the right to terminate the contract immediately. I put this in because it makes the Mutuality of Obligation clear. There is none. I have other clauses that spell this out too:

"4.3 For the avoidance of doubt there is no obligation on the Client to require Services on any particular day, and no obligation to make payment in respect of any periods during which the Services are not required, or during which the Services are not in fact provided."

There is a much longer paragraph in the contract which talks about there being no obligation on both sides.

Personally I'm happy with all of this. If the client doesn't want my services then they tell me and I'll go off and work somewhere else. I don't want or need them having to pay me for some notice period that would strongly indicate that they had an obligation to provide me with work. That would weaken my position with respect to IR35.

[jmo21]

I agree. Luckily for us not many clients have actually picked up on this or are not tough enough to carry it out. We are on 4 weeks notice here and they finished one of the BA's and gave her 4 weeks paid gardening leave Now there is something I didn't think I would see as a contractor. Definately not complaining though.

If more picked up on this they yes notice period would become even more irrelavent than it is now.

My last client co had a hopeless contractor on the team, they even kept him around way longer than I would have ever thought possible once they were aware the drag he was causing on the team.

Once they decided to get rid, he was out the door within a couple of days, and he got paid his full 2 weeks notice.

[northernladuk]

There is no debate. If they had any work they wanted you to do they would have given it to you and you would have billed for it authorised by a signed timesheet. They had none, you didn't bill, but your notice period is still running for 4 weeks.

Your 28 days notice will effectively be spent on the bench.

I agree. Luckily for us not many clients have actually picked up on this or are not tough enough to carry it out. We are on 4 weeks notice here and they finished one of the BA's and gave her 4 weeks paid gardening leave Now there is something I didn't think I would see as a contractor. Definately not complaining though.

If more picked up on this they yes notice period would become even more irrelavent than it is now.

[ratewhore]

The client gave me notice and said I could work the notice from home and they would provide me with work in that time if they have any. Therefore, the end client clearly expected to pay for 'that time'. The debate is over 'that time'. Agency X has not covered it's rear and has been caught out signing me up to a 28 day notice period whilst only having a 5 day notice period in it's contracts with the PSL.

There is no debate. If they had any work they wanted you to do they would have given it to you and you would have billed for it authorised by a signed timesheet. They had none, you didn't bill, but your notice period is still running for 4 weeks.

Your 28 days notice will effectively be spent on the bench.

[SueEllen]

The notice period is for the people they do not want to fire instantly.

For example, they realise they have no more work for you to do, but estimate your 2 week notice period is a perfect amount of time to finish off some remaining work and do a handover.

WHS

If there is a MOO clause then the contract fails on IR35

The clause does seem like a contradiction but I've worked with clients who have also had large outsourcing companies who contracts they have terminated. These contracts also have notice periods in them allowing the outsourcer's staff to tidy up, write documentation and do knowledge transfer.

[jmo21]

If the consultant company is under no obligation to perform work and the client is under no obligation to provide work then what exactly does the notice period mean? Taking your logic to the irreducible minimum, the notice period means absolutely nothing because either party could give 28 days notice and then invoke the "no obligation" clause so the contract is effectively terminated instantly. So why even have the 28 day notice period there? I'm genuinely confused about what purpose you guys think the notice period serves. If it does nothing then why have it there?

I maintain that a contract does create an obligation on both parties although this is limited to the duration of the contract (or notice period). I know people are scared tulipless of the IR35 karma getting them if they even think about "mutuality of obligation" but the IR35 MOO that is a pointer to employment refers to the ongoing obligation to offer or to perform work after the end of the contract term rather than the obligation to offer or perform work during the contract period or to give notice to terminate early. Have a read of your old contracts and see what they say. Does the contract state that there is no MOO at any time or does it say that there is no MOO "beyond the termination or expiry of the contract". Mine says the latter and it's passed an IR35 review from a specialist IR35 reviewer.

The notice period is for the people they do not want to fire instantly.

For example, they realise they have no more work for you to do, but estimate your 2 week notice period is a perfect amount of time to finish off some remaining work and do a handover.

[Wanderer]

There will be a clause stating "the client is under no obligation to provide work and the contractor is under no obligation to do it".
You can have 28 days notice of terminating the agreement if there is no work in that 28 days then tough tulip.

If the consultant company is under no obligation to perform work and the client is under no obligation to provide work then what exactly does the notice period mean? Taking your logic to the irreducible minimum, the notice period means absolutely nothing because either party could give 28 days notice and then invoke the "no obligation" clause so the contract is effectively terminated instantly. So why even have the 28 day notice period there? I'm genuinely confused about what purpose you guys think the notice period serves. If it does nothing then why have it there?

I maintain that a contract does create an obligation on both parties although this is limited to the duration of the contract (or notice period). I know people are scared tulipless of the IR35 karma getting them if they even think about "mutuality of obligation" but the IR35 MOO that is a pointer to employment refers to the ongoing obligation to offer or to perform work after the end of the contract term rather than the obligation to offer or perform work during the contract period or to give notice to terminate early. Have a read of your old contracts and see what they say. Does the contract state that there is no MOO at any time or does it say that there is no MOO "beyond the termination or expiry of the contract". Mine says the latter and it's passed an IR35 review from a specialist IR35 reviewer.

I honestly can't see how a contractual relationship can work without some sort of obligation, it would be nonsensical. For example, would a car dealer enter into a contract with a customer to procure a new car that the customer doesn't have to buy and that the dealer doesn't have to sell? No, it would be a nonsense. It's a simple fact that contracts are formed in order to create an obligation on both parties to perform the contract.

[RockyBalboa]

So are we saying that 'notice' in contracts is only one way - i.e. that you have to give them notice but they can just get rid of you on the spot and the notice period does not apply to them?

As to a 'obligation to provide work' clause, the closest thing I have found is:

'If the Regulations apply, the Company shall pay the Service Provider for all work done regardless of whether it is paid by the Client save, that it shall be entitled to delay payment to the Service Provider whilst it satisfies itself that the Consultant(s) worked for the particular
period in question.'

[jmo21]

With blackjac on this one he is correct. There will be a clause stating "the client is under no obligation to provide work and the contractor is under no obligation to do it".

You can have 28 days notice of terminating the agreement if there is no work in that 28 days then tough tulip.

agreed, either Wanderer works under a brolly and therefore doesn't care about IR35, or he massively misunderstands one of the main things that can be an indicator you are outside IR35, MOO.

[Sockpuppet]

Not correct. You sign a contract to provide services 5 days a week for 6 months. There is an obligation on the client to provide work for that period and equally an obligation for the consulting company to carry out the work for the client.

To terminate the contract before the end, 28 days notice must be given by either party. During that 28 days there is still a contractual obligation on the client to provide work and for the consultant company to carry that work out. If the client fails to provide any work but the consultant company is still available to do the work then the consulting company will still invoice and get paid.

With blackjac on this one he is correct. There will be a clause stating "the client is under no obligation to provide work and the contractor is under no obligation to do it".

You can have 28 days notice of terminating the agreement if there is no work in that 28 days then tough tulip.

[blacjac]

Not correct. You sign a contract to provide services 5 days a week for 6 months. There is an obligation on the client to provide work for that period and equally an obligation for the consulting company to carry out the work for the client.

To terminate the contract before the end, 28 days notice must be given by either party. During that 28 days there is still a contractual obligation on the client to provide work and for the consultant company to carry that work out. If the client fails to provide any work but the consultant company is still available to do the work then the consulting company will still invoice and get paid.

Only if you are a disguised employee working under IR35 rules...

[Wanderer]

I must be missing something here. You're on 28 days notice to terminate the contract. Your contract will specify you get paid for the days you work and that will be proved by a signed timesheet. If you do nothing within that 28 days, no timesheet is signed and you don't bill...

Not correct. You sign a contract to provide services 5 days a week for 6 months. There is an obligation on the client to provide work for that period and equally an obligation for the consulting company to carry out the work for the client.

To terminate the contract before the end, 28 days notice must be given by either party. During that 28 days there is still a contractual obligation on the client to provide work and for the consultant company to carry that work out. If the client fails to provide any work but the consultant company is still available to do the work then the consulting company will still invoice and get paid.