Changes requested to standard IPSE consultancy -> client (direct) contract

[TheCyclingProgrammer]

2 seems to contradict 3... if you're unexpectedly unavailable how do you provide good notice and handover?

Ok, if I'm suddenly unavailable for an emergency then I'm not going to be able to give any notice and might not even be able to provide a sub.

But if something comes up and I'm able to give some notice then I will. Unexpected doesn't have to mean immediate.

[pr1]

I've never had much strong push back on substitution clauses (I use a slightly modified version of the IPSE contract) but when I've had queries I've always tried to sell the pros to the client:

1. I explain to them that whilst MyCo primarily supplies my services, I very much run a business and as such need the flexibility to provide a substitution where necessary, even if that happens in rarely.

2. I tell them that by being able to use a substitute or sub-contract parts of the work to somebody else, then should I personally ever become unavailable unexpectedly then I will be able to provide continuity of service and not leave them in the lurch. Additionally it means if I ever need to bring in specialist help I can do so, normally at no extra cost to the client (including the time and expense of having to find that specialist themselves). I know that a full substitute and sub-contracting part of the work aren't really the same thing, but it helps to lump them together when selling this to the client.

3. I reassure them that I will always give them good notice if I need to bring a substitute in and will always ensure that any substitute is appropriately qualified and if any handover is needed this will be at no extra cost to them.

4. I tell them that whilst I have an unfettered right to supply a substitute, if they are unhappy about the use of a substitute or they are not happy with a substitute's performance I will try and resolve it and that whilst they don't have the right to reject a substitute, if they are still not happy they do always have the right to terminate the contract (my contract offers pretty generous cancellation notices to the client - usually no notice and never more than a week or two).

The last point means you do effectively get an unfettered right to substitute but the client is reassured because whilst they can't say "you aren't allowed to send a substitute" they can still just say "OK we're cancelling the contract". IMO, not only does this reinforce the B2B nature of the contract due to the risk on my part (i.e. if I'm unable to provide my services they can just cancel if they don't want or like my sub) I think if push came to shove, for the sake of sending a sub for a brief period of time to cover an absence they'd just accept the sub rather than cancelling and then needing to find somebody else, especially if right in the middle of the project.

For the record I've never needed to send a sub. Never had a problem as yet.

2 seems to contradict 3... if you're unexpectedly unavailable how do you provide good notice and handover?

[TheCyclingProgrammer]

I've never had much strong push back on substitution clauses (I use a slightly modified version of the IPSE contract) but when I've had queries I've always tried to sell the pros to the client:

1. I explain to them that whilst MyCo primarily supplies my services, I very much run a business and as such need the flexibility to provide a substitution where necessary, even if that happens in rarely.

2. I tell them that by being able to use a substitute or sub-contract parts of the work to somebody else, then should I personally ever become unavailable unexpectedly then I will be able to provide continuity of service and not leave them in the lurch. Additionally it means if I ever need to bring in specialist help I can do so, normally at no extra cost to the client (including the time and expense of having to find that specialist themselves). I know that a full substitute and sub-contracting part of the work aren't really the same thing, but it helps to lump them together when selling this to the client.

3. I reassure them that I will always give them good notice if I need to bring a substitute in and will always ensure that any substitute is appropriately qualified and if any handover is needed this will be at no extra cost to them.

4. I tell them that whilst I have an unfettered right to supply a substitute, if they are unhappy about the use of a substitute or they are not happy with a substitute's performance I will try and resolve it and that whilst they don't have the right to reject a substitute, if they are still not happy they do always have the right to terminate the contract (my contract offers pretty generous cancellation notices to the client - usually no notice and never more than a week or two).

The last point means you do effectively get an unfettered right to substitute but the client is reassured because whilst they can't say "you aren't allowed to send a substitute" they can still just say "OK we're cancelling the contract". IMO, not only does this reinforce the B2B nature of the contract due to the risk on my part (i.e. if I'm unable to provide my services they can just cancel if they don't want or like my sub) I think if push came to shove, for the sake of sending a sub for a brief period of time to cover an absence they'd just accept the sub rather than cancelling and then needing to find somebody else, especially if right in the middle of the project.

For the record I've never needed to send a sub. Never had a problem as yet.

[fidot]

I can see why clauses like "you have no control over the worker!" would scare a small company. The same with the RoS (they're probably expecting me to sub in a graduate with bio skills and... profit!). I guess it's a case of education needed as to how this all works with then. I'm afraid I don't yet have the vocabulary to confidently speak on the matter however. But I'm getting there!.

I find the best way to counter this attitude is to explain that as the client can give zero notice, you are effectively guaranteeing the quality of any work of the primary or sub-contracted worker. If they are not happy, then they just invoke the zero notice.

[SueEllen]

Has anyone handled similar situations before? Any tips? You're right though I think, northernladuk, when you say this is all a big setup for continued IR35 issues.

Yep binned them and took the other contract.

[northernladuk]

For the avoidance of confusion for anyone coming across this in the future, to clarify I meant "digital agency" when I said "agency".

Good stuff thanks. Don't forget to tell us what route you took and how it ended up. As already mentioned I'm sure this isn't the only small client that worries about our contracts.

[russtifer]

For the avoidance of confusion for anyone coming across this in the future, to clarify I meant "digital agency" when I said "agency".

[sociopath]

Agency? I thought this was direct?

Best bet is to get the contract over to QDOS and see what they have to say. Could be worth 90 quid to get away from a potential nightmare.

Contracts are negotiable. As NLUK suggests use QDOS to review and negotiate changes.

I assume the rest of the contract is water tight (and not just from an IR35 perspective).

[northernladuk]

Thanks for the replies all.

I think it fundamentally comes down to the fact that they're a small agency with not much experience. It's the MD reviewing and requesting the contract changes.

Agency? I thought this was direct?

Best bet is to get the contract over to QDOS and see what they have to say. Could be worth 90 quid to get away from a potential nightmare.

[russtifer]

Thanks for the replies all.

I think it fundamentally comes down to the fact that they're a small agency with not much experience. It's the MD reviewing and requesting the contract changes.

I can see why clauses like "you have no control over the worker!" would scare a small company. The same with the RoS (they're probably expecting me to sub in a graduate with bio skills and... profit!). I guess it's a case of education needed as to how this all works with then. I'm afraid I don't yet have the vocabulary to confidently speak on the matter however. But I'm getting there!

Has anyone handled similar situations before? Any tips? You're right though I think, northernladuk, when you say this is all a big setup for continued IR35 issues.

[northernladuk]

RoS is (arguably) one of the three main factors along with MoO and D&C. If they don't want a RoS I think you are making a big mistake thinking 'this is not great' for IR35. The signature thing kinda hammers the final nail home.

If this is their approach to the contract is be willing to bet it's the tip of the iceberg with clear D&C in play and will expect you to take work on as they see fit plus other nightmares.

I'd be walking away from this one I'm afaid.

[GB9]

It sounds like they want the op as an employee rather than a service provided through a company.

Inside ir35 but that's not necessarily an issue if the price is right.

In terms of the signatory, are they wanting to exclude your company completely and effectively have you as a non incorporated supplier?

[SueEllen]

Firstly if all your insurances e.g. professional liability, public liability, employers liability are in the consultancy name then by putting it in your own name means the insurances are not valid. So I would explain this to the client and push back very strongly. The only change I would make is putting your position in the consultancy and their position in clientco on the contract on the signature line.

If they need you personally to sign things about H&S, security etc then this needs to be separate documents not the contract.

If this becomes a sticking point I would either use an umbrella company or decline the contract.

Secondly you haven't made it clear what changes they want in the substitution clause. As they aren't contracting you directly but your company they can ask for the person to have similar skills, experience and whatever else is needed for the role and the substitute will not be unreasonable refused but that's about it. If they try and make the clause any stronger they could fall foul of discrimination laws, which apply to all workers.

Finally if they want larger changes I suggest you pay for a solicitor to rewrite the bits that require changing as it was written by a solicitor. You could use the person who wrote it in the first place as their name is on the document.......

[russtifer]

This is my first direct gig () as a Ltd that I'm about to commence but this did mean I needed to provide a contract. Following previous advice, I thought it prudent to use IPSE's default IR35-clear-ish contract as the base.

The client's returned it with a few request amendments.

Firstly, they're not happy with any of the substitution clauses. Not great for IR35 but fair enough. I'll try to push it to a least fettered but we'll see on that one.

Secondly, and more concerningly, they want the signatory area to be rephrased from "On behalf of the Consultancy by MY NAME" to "MY NAME as the contractor".

I have two concerns with this. The IR35 is, again, obviously not great (being named on the contract). But a more pressing concern is whether this has any legal implication in terms of me being named (i.e. personal liability for the contract rather than my limited).

I'll try and grab some legal advice from the IPSE helpline tomorrow but time's tight on this one and was wondering if anyone could offer any thoughts/pointers on this? Perhaps some suggestions on how to renegotiate this wording?

Cheers in advance.