Reply to: Opt out?

[malvolio]

This my understanding:

If you are not controlled by the client then the regulations don't apply anyway i.e. you are outside IR35 the opt out clause is irrelevant, because they don't apply to you.

It is argued that opting in or out doesn't point to anything as what matters is whether you're controlled by the client.

Here is a guide:

Conduct of employment regulations: a guide to opting in or out

If I was outside IR35 I wouldn't really bother about opting in because it's irrelevant.

This is also my view; I DGAS about the Agency Regs since they simply don't apply to me, and by positively opting out you are accepting that they should apply, which is a bit of a conundrum.

Others clearly think it's important to them. Heigh ho.

[BlasterBates]

Coming back to the IR35 argument.

although employment status is determined on a case-by-case basis, a limited company contractor accepting on paper that they are controlled by the client and wish to be covered by the regulations is sending a pretty negative message to HMRC about their employment status. Control by the client is a key factor in determining the employment status of a contractor, and can be part of a package of evidence that puts a contractor inside IR35.

Conduct of employment regulations: a guide to opting in or out

[zudecke]

I get it.

Thanks to all you lovely folks!!

Quickly becoming my favourite app!

[SueEllen]

Could mishap that occurred be the reason why this clause has now been introduced in this renewal?

Yep.

Some agencies put a clause in your contract with wording that basically means that if the client doesn't pay their invoices as agreed, the agency can tell you to down tools.

[BlasterBates]

This my understanding:

If you are not controlled by the client then the regulations don't apply anyway i.e. you are outside IR35 the opt out clause is irrelevant, because they don't apply to you.

It is argued that opting in or out doesn't point to anything as what matters is whether you're controlled by the client.

Here is a guide:

Conduct of employment regulations: a guide to opting in or out

If I was outside IR35 I wouldn't really bother about opting in because it's irrelevant.

[tractor]

..

Neither. You can gain the same protections by negotiating your contract properly: Just like we used to before the agencies started misusing the opt out. You and agents always ignore the fact that NOT opting out affords more protection than just handcuff and non payment in that it prevents some of the excessive risk transfer shenanigans that agents otherwise use as their default position.


Tough. It's my opinion, and I'm sticking with it. As you are with yours.

So, just for fun, let's assume you are running a small design business, using three sub-contractors to help you deliver a product to your client. The total contract value is around £250k and your subbies will be earning £50k each for their efforts. Your have minimal reserves, being a small company. The job is done and your subbies, not unnaturally, invoice you for payment. Under the terms of the Agency Regs - which would apply here since they are badly worded and you are acting as the subbies' agent as far as they are concerned - you are legally bound to pay them despite not having the money to do so until your client coughs up in 60-90 days time. So you bankrupt your company.

That's why the opt out is necessary. And that's why it's not supposed to be anything to do with one man band contractors.

You cannot claim that both are true IF you opt out. You simply cannot, however much in denial you are.

Obviously the subby example is out of context, we are not debating the reason the opt out exists. We are debating whether it is of benefit to those that do not wish to take advantage of it and your inability to understand it despite being given many, many pages of reasons, time and again. It matters not whether it aligns with your view. You said you don't understand why businesses would not opt out to 'manage' their business. They don't; they use their rights under the Regs to manage their RISK. What part of this is too difficult for you to understand. I don't want you to change your stance wrt your own business. It is just time that you respected everyone elses' and stopped mincing words to suit your own perspective.

Just strikes me as extremely odd that some contractors try to persuade other contractors that opting out is beneficial regardless. It is harder to persuade people like you that the Regs offer real business risk reduction opportunities than it is to persuade agents and clients. And that is a ridiculous state of affairs!

[zudecke]

So the protection against an Agency refusing to pay even when a signed timesheet is in hand isn't a worthwhile business benefit?

The limit of handcuff clauses to a maximum of 8 weeks from the routine 6 and 12 months the Agencies like to try to impose isn't a business benefit?

Those 2 alone make Opting out a damn stupid business choice, neither are niff-naff and trivia, they're significant in a couple of scenarios when Agencies play silly buggers.
The Opt Out as it is applied is indefensible, it's a hindrance to us as contractors and there's almost no scenario where it can represent a benefit. No matter how many times you try to play down the PCG's role in being instrumental in lumbering all contractors with this mess for years past and god only knows how many years to come it's firmly at the door of the PCG which you try to promote constantly.



This is what is typically known as a LIE. Agents do it all the time, on the subject of Opt Outs and the beneficial business position you give away they're routine things from the vast majority of Agents.

Great response, thank you so much for the explanation and rationale.

On those grounds I think I should review my original decision.

Last invoice had problems. Although client had approved timesheets, client had not paid the agency for my work.

My pay was delayed as a result.

Nothing calculated init, just that the client isn't best organised with admit duties and the organisation set up is convoluted.

Could mishap that occurred be the reason why this clause has now been introduced in this renewal?

Thanks everyone for all the replies!

[TykeMerc]

So you're defending the Opt Out on the basis of the old "pay your invoices late and hope the supplier will put up with it" basis? You're actually defending lousy business practice that has bankrupted thousands of small businesses for decades.

I'm astounded that you have the gall to post that.

Late payments is exactly why I stopped supplying hardware, software and services direct to clients and limited myself strictly to services with short invoice periods. I came close to bankruptcy on several occasions as a result of clients delaying payments until the summons hit their doormats, it was routine.
Thankfully with the likes of Pay on Time and the rules on late payment culture in Government and business being stamped out or at least stamped down a fair bit it's less prevalent than it was.

[malvolio]

How can the first two points that I emboldened even be compatible. One OR the other is correct, NOT both. Which one do you wish to remove?

Neither. You can gain the same protections by negotiating your contract properly: Just like we used to before the agencies started misusing the opt out.

As for the last sentence, there are something like 50 pages of reasons here and more over on the PCG forums, if you still don't get it then either there is no hope or you have an ulterior motive. I don't care which but please stop making false or conflicting statements, there is enough FUD about this already. It's not the first time I have asked.

Tough. It's my opinion, and I'm sticking with it. As you are with yours.

So, just for fun, let's assume you are running a small design business, using three sub-contractors to help you deliver a product to your client. The total contract value is around £250k and your subbies will be earning £50k each for their efforts. Your have minimal reserves, being a small company. The job is done and your subbies, not unnaturally, invoice you for payment. Under the terms of the Agency Regs - which would apply here since they are badly worded and you are acting as the subbies' agent as far as they are concerned - you are legally bound to pay them despite not having the money to do so until your client coughs up in 60-90 days time. So you bankrupt your company.

That's why the opt out is necessary. And that's why it's not supposed to be anything to do with one man band contractors.

[tractor]

...

Well since you ask so nicely...

Apologies for not realising it was a member-only resource, bat ask PCG why it isn't public, not me.

However, in brief

• The opt out has nothing to do with IR35, directly or indirectly;
• The Regs were never meant for freelance contractors, who were always meant to be out of scope, but BIS (as was) screwed up the wording and has repeatedly failed to correct it
• Opting out saves the agency time, money and risk; a clue as to why they insist you should do so;
• Opting out, so saving the agency a heap of work (but having zero impact on your business) therefore means you have a slight advantage when negotiating a better contract, but;
• You lose a degree of protection against handcuff clauses and non-payment;
• So it's your decision which is better for you.

And if you haven't sent in a genuine opt out for both you personally and your company at the point you apply for the role with the agency it's highly you won't be opted out anyway so it's all highly academic: however I don't recall anyone taking an agency to court to test that properly so it remains a strong suspicion rather than hard and fast fact.

As to why we have the opt out, it is of genuine value to a range of small companies who use their own staff or subbies and who would otherwise be hamstrung by a set of regulations aimed at protecting vulnerable workers on low wages directly employed by a range of agencies. Why any highly paid and skilled independent contractor thinks they need to use the Regs to manage their business continues to defeat me.

Perhaps direct your ire at the agencies who have subverted what the Regs were meant to do in order to benefit their own businesses, not at those who are trying to make sense of things for those who can't be bothered to find out for themselves.

As for PCG membership, it's a no brainer on several levels. Apart form the protection is offers, look at all the detailed expert advice you would have access to...

How can the first two points that I emboldened even be compatible. One OR the other is correct, NOT both. Which one do you wish to remove?

As for the last sentence, there are something like 50 pages of reasons here and more over on the PCG forums, if you still don't get it then either there is no hope or you have an ulterior motive. I don't care which but please stop making false or conflicting statements, there is enough FUD about this already. It's not the first time I have asked.

[TheCyclingProgrammer]

Response from agent:

" All except one have chosen to opt out due to the regulation placed by the government, I have included a link below which will be able to explain the difference better than I will be able to as there is quite a bit of information."

Confused dot com

Usual agent bollocks. The one time I used an agency I opted out and had that exact response, followed by a call from their FD! That was 5 years ago mind.

[TykeMerc]

So the protection against an Agency refusing to pay even when a signed timesheet is in hand isn't a worthwhile business benefit?

The limit of handcuff clauses to a maximum of 8 weeks from the routine 6 and 12 months the Agencies like to try to impose isn't a business benefit?

Those 2 alone make Opting out a damn stupid business choice, neither are niff-naff and trivia, they're significant in a couple of scenarios when Agencies play silly buggers.
The Opt Out as it is applied is indefensible, it's a hindrance to us as contractors and there's almost no scenario where it can represent a benefit. No matter how many times you try to play down the PCG's role in being instrumental in lumbering all contractors with this mess for years past and god only knows how many years to come it's firmly at the door of the PCG which you try to promote constantly.

Response from agent:

" All except one have chosen to opt out due to the regulation placed by the government, I have included a link below which will be able to explain the difference better than I will be able to as there is quite a bit of information."

Confused dot com

This is what is typically known as a LIE. Agents do it all the time, on the subject of Opt Outs and the beneficial business position you give away they're routine things from the vast majority of Agents.

[malvolio]

Which is PCG members only content so unless people join the organisation responsible for saddling us with this cluster of things starting with F then that link is useless. The Opt Out has been used to bully and batter contractors to give up business benefits since it was negotiated.

Rather than trying to push membership of that organisation, why don't you just publish the "definitive version" in public?

Well since you ask so nicely...

Apologies for not realising it was a member-only resource, bat ask PCG why it isn't public, not me.

However, in brief

• The opt out has nothing to do with IR35, directly or indirectly;
• The Regs were never meant for freelance contractors, who were always meant to be out of scope, but BIS (as was) screwed up the wording and has repeatedly failed to correct it
• Opting out saves the agency time, money and risk; a clue as to why they insist you should do so;
• Opting out, so saving the agency a heap of work (but having zero impact on your business) therefore means you have a slight advantage when negotiating a better contract, but;
• You lose a degree of protection against handcuff clauses and non-payment;
• So it's your decision which is better for you.

And if you haven't sent in a genuine opt out for both you personally and your company at the point you apply for the role with the agency it's highly you won't be opted out anyway so it's all highly academic: however I don't recall anyone taking an agency to court to test that properly so it remains a strong suspicion rather than hard and fast fact.

As to why we have the opt out, it is of genuine value to a range of small companies who use their own staff or subbies and who would otherwise be hamstrung by a set of regulations aimed at protecting vulnerable workers on low wages directly employed by a range of agencies. Why any highly paid and skilled independent contractor thinks they need to use the Regs to manage their business continues to defeat me.

Perhaps direct your ire at the agencies who have subverted what the Regs were meant to do in order to benefit their own businesses, not at those who are trying to make sense of things for those who can't be bothered to find out for themselves.

As for PCG membership, it's a no brainer on several levels. Apart form the protection is offers, look at all the detailed expert advice you would have access to...

[TykeMerc]

Who knows... But the definitive version is over here...

Which is PCG members only content so unless people join the organisation responsible for saddling us with this cluster of things starting with F then that link is useless. The Opt Out has been used to bully and batter contractors to give up business benefits since it was negotiated.

Rather than trying to push membership of that organisation, why don't you just publish the "definitive version" in public?

[malvolio]

What was the link..?

Who knows... But the definitive version is over here...