Reply to: Effect on Limited Company Liability Insurance without a signed contract

[AussieDigger]

Hmmmm....turns out when the client was challenged on this, they walked you out the door. Think big retail client with a knight and horse astride - seems being told their contractors are not working 'above board' doesn't go down well.....wonder how HMRC might feel about that one ?

[northernladuk]

I'm not suggesting for a second that not having a contract is good , far from it but it's not essential to do business. What I am saying is think about the relationship and how you actually work don't rely on bits of paper because if you are challenged a contract is only a guide as to what should happen.

I think we will have to agree to differ here. I can see what you are saying but those bits of paper are your evidence you have tried, the other option is to say 'I do this' and the client say 'he does what I tell him'. If there is a contract you can both say 'What it says on the contract'. I know exactly which of those two situations I want. I agree it is just a bit of paper and the work practice count but would be foolhardy to pass up a chance to shore up your defense.

[geoff from contracta IOM]

I'm not suggesting for a second that not having a contract is good , far from it but it's not essential to do business. What I am saying is think about the relationship and how you actually work don't rely on bits of paper because if you are challenged a contract is only a guide as to what should happen.

[northernladuk]

In terms of direction and control I would argue that the client can not make you do anything as you have no tie to them beyond what you want to do. the reason IMHO why IR35 comes into play is precisely because there are binding contracts in place which confer obligations and responsibilities that a usual business to business relationship would not.

What do you mean 'you want to do'? You swan in to a client, do what you want, don't take any direction and control? That isn't very realistic. Your argument cuts both ways but you don't want to seem to admit the other way.

Ok lets not talk contract but a lack of a list of deliverables is just professional suicide. Just turning up and doing some work is what permies do. We deliver to defined schedules.

The JLJ case went against him because he stopped delivering set objectives and ended up being generic. How can you be any more generic than have nothing.

Still can't believe you are arguing to not have a contract is acceptable!!

[Hex]

In terms of direction and control I would argue that the client can not make you do anything as you have no tie to them beyond what you want to do. the reason IMHO why IR35 comes into play is precisely because there are binding contracts in place which confer obligations and responsibilities that a usual business to business relationship would not.

I might have misunderstood this. I thought the OP had signed an original contract but wasn't getting renewals signed. In that case, the contract terms would be the same as the original but he would have no schedule. If he didn't ever get any contract then things gets more blurry, but even then I would say there is an implied contract based on how the relationship has evolved so far and it might be better if this was documented and agreed rather than being open to subjective speculation on what the working practices are.

[geoff from contracta IOM]

Yes but the client doing what they want with you can also be called direction and control. Working without a contract is just silly on many levels. You could arge all the points until you are blue in the face. At the end of the day, lean on the agent, get a contract, sorted.



Indeed but you are talking about spending money on making that claim and getting it before a judge. Would a bit of effort to get a signed contract you can wave under the agents nose and get it sorted before it gets legal be a lot more sensible.

Both comments could quite possibly be true but both comments can be easily mitigated by insisting on a contract which shouldn't be difficult. If an agency refuses to give you a signed contract then something is very wrong.

In terms of direction and control I would argue that the client can not make you do anything as you have no tie to them beyond what you want to do. the reason IMHO why IR35 comes into play is precisely because there are binding contracts in place which confer obligations and responsibilities that a usual business to business relationship would not.

[geoff from contracta IOM]

So what would the insurance company's view be on this ? Would your insurance be valid if no contract was in place ? Would it not be a term and condition of the insurance policy that a valid and legal contract was in place defining the work to be done, etc etc ?

If I was a painter would we need a contract for my insurance to be valid ? This is I believe why HMRC try and grab contractors by the danglies , they don't think like other businesses.

[blacjac]

Draw up your own contract, with the terms you want (hint, PCG template is a good start), then give it to him saying unless its signed within a week you walk.

[northernladuk]

Note I used the term 'agency' loosely. In actual fact, its a limited company that a director is running his contractors through, and he's too busy to bother doing all the right company stuff that sub-contractors (who are companies in their own right) are supposed to get). Added to that, he is also a permanent employee of ClientCo and acts as the hiring manager for his area.

Seeing some conflicts here ....

Christ, I hope it all seems a lot better in practice because that setup sounds very scarey. More so than a normal situation would I be insisting on a contract there. Sounds like a bit of ass covering is a must. He is a hiring manager but supplies the contractors to himself? That sounds very dodgy. It is hard to say from this angle but try find out what the worst case is. If his client co find out and he gets the sack you are most definately going to want a watertight contract.

Maybe in practice it all runs alot smoother but still....

[Hex]

I agree with NLUK in that if you are working renewal(s) with no renewal contract then you are effectively extending the terms of the original contract but with no schedule of work to be done in this renewal. This has got to be a red flag for IR35. If I were HMRC I'd be arguing that both you and your client were accepting that work was just ongoing until you gave notice. You are becoming part and parcel of the organisation this way and blurring the lines between you and permies.

[AussieDigger]

To the OP. Have you actually spoken to the agent and asked him WHY he isn't giving you a contract? Is he just being lazy putting you at risk when he doesn't care or is there a reason?

Note I used the term 'agency' loosely. In actual fact, its a limited company that a director is running his contractors through, and he's too busy to bother doing all the right company stuff that sub-contractors (who are companies in their own right) are supposed to get). Added to that, he is also a permanent employee of ClientCo and acts as the hiring manager for his area.

Seeing some conflicts here ....

[northernladuk]

To the OP. Have you actually spoken to the agent and asked him WHY he isn't giving you a contract? Is he just being lazy putting you at risk when he doesn't care or is there a reason?

[northernladuk]

Surely in regard to IR35 if you do not have a contract both parties are essentially free to do as they please ? In normal business to business transactions for non contracting companies IR35 is never an issue as there are no implied work terms that you get when you sign a contract. The company will provide you a service as long as they feel like it , they get paid and until you tell them to bugger off. That to my mind is a true business to business arrangement. Never mind MOO and substitution clauses this is the actual reality of the arrangement.

Yes but the client doing what they want with you can also be called direction and control. Working without a contract is just silly on many levels. You could arge all the points until you are blue in the face. At the end of the day, lean on the agent, get a contract, sorted.

In terms of getting paid , if a company carries out work for another company and issues an invoice upon completion of the work you have no more or less hope of getting paid than with a contract in place, if anything more hope as a judge will simply look at the relationship and not all the get out clauses in a contract.

To form a binding contract - offer ( I will come to do some work ) , acceptance ( turn up to work and they don't throw you out) and consideration ( payment )

The last does not have to happen just the first two to bring a claim.

Indeed but you are talking about spending money on making that claim and getting it before a judge. Would a bit of effort to get a signed contract you can wave under the agents nose and get it sorted before it gets legal be a lot more sensible.

Both comments could quite possibly be true but both comments can be easily mitigated by insisting on a contract which shouldn't be difficult. If an agency refuses to give you a signed contract then something is very wrong.

[AussieDigger]

Surely in regard to IR35 if you do not have a contract both parties are essentially free to do as they please ? In normal business to business transactions for non contracting companies IR35 is never an issue as there are no implied work terms that you get when you sign a contract. The company will provide you a service as long as they feel like it , they get paid and until you tell them to bugger off. That to my mind is a true business to business arrangement. Never mind MOO and substitution clauses this is the actual reality of the arrangement.

So what would the insurance company's view be on this ? Would your insurance be valid if no contract was in place ? Would it not be a term and condition of the insurance policy that a valid and legal contract was in place defining the work to be done, etc etc ?

[geoff from contracta IOM]

Surely in regard to IR35 if you do not have a contract both parties are essentially free to do as they please ? In normal business to business transactions for non contracting companies IR35 is never an issue as there are no implied work terms that you get when you sign a contract. The company will provide you a service as long as they feel like it , they get paid and until you tell them to bugger off. That to my mind is a true business to business arrangement. Never mind MOO and substitution clauses this is the actual reality of the arrangement.

In terms of getting paid , if a company carries out work for another company and issues an invoice upon completion of the work you have no more or less hope of getting paid than with a contract in place, if anything more hope as a judge will simply look at the relationship and not all the get out clauses in a contract.

To form a binding contract - offer ( I will come to do some work ) , acceptance ( turn up to work and they don't throw you out) and consideration ( payment )

The last does not have to happen just the first two to bring a claim.