Open ended contract (no fixed duration)

[Lance]

Open ended contract (no fixed duration)

Lance, can you stop posting on serious questions please, because you're an idiot. Thanks.

Well that was helpful of you. From Berkshire?

As it happens neither of my points were wrong, but one provoked a discussion from other (useful) posters.

[northernladyuk]

Has anyone ever been offered an open ended contract?
i.e. no specified duration, it just continues until terminated (4 weeks notice either side). The project has potential to last 18-24 months.

Pros:
1. potential to last a long time
2. no need for renewals
3. some mortgage lenders may see it positively as an ongoing contract / more certainty?

Cons:
1. IR35 risk? (not sure)
2. no renewals means no natural prompt to renegotiate rates
3. other mortgage lenders may think it's risky? (although fixed term contracts usually have the same 4 weeks notice anyway)

Thoughts welcome, I haven't come across this
before!

Not really relevant but I thought I'd share. This is not a UK-based story so IR35 not relevant.

My current contract should have said:duration 12 months or at completion of the project whichever is the sooner. Instead it said: duration 12 months or at completion of the project whichever is the later. Neither client (intermediary) nor I spotted this, and when I applied for mortgage it swung it for me. Convinced them that there was >5 years work.

[northernladuk]

Absolutely and now the OP has furnished us with more information it certainly looks a lot better although I'd still be a little wary about working practices trumping his contract. Obviously the OP should be having a full contract and WP review and making sure he's up to speed with IR35 to avoid part and parcel issues.

My (albeit limited) experience of rolling and open ended contracts is they need to treated with a greater degree of diligence but if the case is as he described in his later post then it's not quite as bad as I assumed.

[TheFaQQer]

I think you've got MoO wrong as well in that example but an open ended gig messes with MoO, it's got to be D&C and confuses contract for and contract of service up let alone problems with part and parcel that can occur. It 'could' be managed with some very tight paperwork and working practices it the very fact they want it open ended would indicate they don't want to bother.

We don't have enough detail but start with 'Open ended contract is a slam dunk inside IR35' and work upwards.

Good point about the 24 month rule though.

This isn't necessarily an "open ended gig", though - it's a contract to provide professional services for the duration of the project. At the end of the project, the contract will end.

Is there mutuality of obligation to provide work beyond the end of the contract? Arguably not. Is there an obligation to move onto different projects during the duration of the project? Possibly, possibly not - nobody here knows what else is in the contract and what the reality of the working practices may be.

Is there a genuine right of substitution? Again, possibly. If there is, then that's one of the three pillars of employment destroyed - and you only need to prove one if you are investigated for IR35. Would the contractual obligation be genuine? Again, nobody here knows what the client would or would not do in that situation.

So we come to the last point - is there supervision, direction and control? The contract (from what has been shared here) is clear that the contractor will set their own time and self direction. If that's genuine, then I'm struggling to see how you could argue that just because the contract is for the duration of the project and will then end makes is a slam dunk inside IR35 situation.

If the contract is for the project duration, then is that any different from an IR35 perspective than having 4 six month contracts that are the same and then either terminating at the end or being kept around doing nothing until the end of the contract? I'd suggest not.

[balowen]

Found a good article:
IR35:Substitution, control and mutuality of obligation :: Contractor UK

The above basically argues that if you can prove at least one of Substitution, Control or MoO then you are safe.

So being without a fixed duration doesn't seem to come into it. At least not to the same extent. Yes, it could create a case
for "part & parcel"... but does that trump any of the above? Substitution? Control? MoO? I'm assuming it doesn't.

Anyway, my plan is to query the open duration. If the reasons sound reasonable and considered I'll probably go for it. Otherwise will ask for 12 months and then seek to renew. I think the 24 month rule is only applicable for expenses btw.

[SeanT]

I think in light of all this you need to convince them to make it a 23 month contract...

[SteelyDan]

Never knew that.
Seems slightly nonsensical though.
Personally I'd presume an open ended contract means they want someone under MOO anyway so I'd be wary.

Lance, can you stop posting on serious questions please, because you're an idiot. Thanks.

[balowen]

Thanks to all for the quick replies so far!

The contract contains clauses that are clear about things that really matter to IR35, such as control of own time, self direction, not considered an employee, right to substitution etc.

It's also a serious / legit organisation. So I think they are just trying to be efficient (avoid renewals) and just do the paperwork once. Possibly they also want to lock in the rates.

Indeed IR35 does not specify a duration. However, staying there a long time (up to 2 years potentially), could make a case for being "part & parcel" of the organisation. At the point , an open ended contract would not help. This is my main concern.

There is a specific project to be delivered.

[northernladuk]

Never knew that.
Seems slightly nonsensical though.
Personally I'd presume an open ended contract means they want someone under MOO anyway so I'd be wary.

I think you've got MoO wrong as well in that example but an open ended gig messes with MoO, it's got to be D&C and confuses contract for and contract of service up let alone problems with part and parcel that can occur. It 'could' be managed with some very tight paperwork and working practices it the very fact they want it open ended would indicate they don't want to bother.

We don't have enough detail but start with 'Open ended contract is a slam dunk inside IR35' and work upwards.

Good point about the 24 month rule though.

[Lance]

You have got to be kidding right? I'd have a read of a couple of guides. It fails on a number of points.

Never knew that.
Seems slightly nonsensical though.
Personally I'd presume an open ended contract means they want someone under MOO anyway so I'd be wary.

[northernladuk]

If it's tied in to one project only then I don't see the time being open-ended as a problem. There's certainly no explicit ruling to say a contract has to be time limited to be outside IR35.

You have got to be kidding right? I'd have a read of a couple of guides. It fails on a number of points.

[Lance]

Open ended contract (no fixed duration)

If it's tied in to one project only then I don't see the time being open-ended as a problem. There's certainly no explicit ruling to say a contract has to be time limited to be outside IR35.

Although... you could be a bit stuck claiming any expenses as you can reasonably expect to be there for more than 24 months.

IANAL

[FrontEnder]

An "open ended contract" is also known as a "permanent job"

Which also normally have about a 4 week notice period too...

[WTFH]

An "open ended contract" is also known as a "permanent job"

[balowen]

Has anyone ever been offered an open ended contract?
i.e. no specified duration, it just continues until terminated (4 weeks notice either side). The project has potential to last 18-24 months.

Pros:
1. potential to last a long time
2. no need for renewals
3. some mortgage lenders may see it positively as an ongoing contract / more certainty?

Cons:
1. IR35 risk? (not sure)
2. no renewals means no natural prompt to renegotiate rates
3. other mortgage lenders may think it's risky? (although fixed term contracts usually have the same 4 weeks notice anyway)

Thoughts welcome, I haven't come across this
before!