Reply to: Is this clause reasonable?

[Mailman]

And MAILMAN, opt-in opt-out is a business decision and frankly only applies if you are a BOS contractor, if you do true B2B i.e. fully costed packages of work for a fixed price then its meaningless.

Absolute twaddle...what REAL business would not do everything possible to protect its profits?

Mailman

[Denny]

There are so called businessmen on this forum that claim to run their business like a business BUT when it comes to protecting their shareholders profits they completely and utterly fail them by opting out of the regs.

Think of it this way, you are a business and its in your interests to maximise profits for your shareholders. This should also mean using the laws of the land to their fullest advantage to ensure your shareholders profits are not in anyway threatened by dodgy f8ckers who pretend to be agents

Mailman

Could have said it better myself.

[tim123]

The rule that an unjustified charge for a breach of contract unenforcable is applicable to all contracts.

It's just that it's expected that a Business will be in a position to take their own action against the other party whereas a consumer is not.

tim

[boredsenseless]

A penalty clause IS enforcable if the penaly sought is either: the exact amount lost (to be determined at the point of the loss), or a reasonable pre-estimate of the average loss.

I'm also sure that the recent concept of penalty charges being unenforcable (i.e. credit card charges) is applicable more to consumers than businesses, so go ahead if you want to argue you are an individual not a business if you want to see where that gets you in other discussions such as IR35.

Put simply, you are a business and you are in a position to negotiate your own contracts, if you don't like a clause remove it or reject the contract don't whinge about unenforcable clauses later. It just isn't grown up.

And MAILMAN, opt-in opt-out is a business decision and frankly only applies if you are a BOS contractor, if you do true B2B i.e. fully costed packages of work for a fixed price then its meaningless.

It most definetly isn't a means of protecting shareholder value, its simply another example of the Nanny State.


--- Just re-read this and it seem liek I'm getting at Tim, I'm not its just his post on a similar vein was the best description of penalty clauses.

[tim123]

Which means it is unenforceable.

Absolute rubbish.

I'll repeat (more or less) what I said before.

A penalty clause IS enforcable if the penaly sought is either: the exact amount lost (to be determined at the point of the loss), or a reasonable pre-estimate of the average loss.

In this case the agency are asking for the first. It is only the mechansim of determination that is in question.

A penalty clause isn't unenforcable in principle. It is only unenforcable if the penalty sought is disproportionate.

tim

[Mailman]

erm..i've opted out verbally, but not yet signed anything yet....i was told that via opting out, its a better indicator for being outside IR35...

???

There are so called businessmen on this forum that claim to run their business like a business BUT when it comes to protecting their shareholders profits they completely and utterly fail them by opting out of the regs.

Think of it this way, you are a business and its in your interests to maximise profits for your shareholders. This should also mean using the laws of the land to their fullest advantage to ensure your shareholders profits are not in anyway threatened by dodgy f8ckers who pretend to be agents

Mailman

[Mailman]

It is a penalty clause.

Which means it is unenforceable.

I guess the best thing to do is to get the clause removed because you know the agency is going to use that clause to not pay you when you decide to engage a different agency at the end of the contract.

Mailman

[Denny]

erm..i've opted out verbally, but not yet signed anything yet....i was told that via opting out, its a better indicator for being outside IR35...

???

Rubbish, it has nothing to do with it. Opting in means you are safer with payment defaults and can go direct without hassles. It's purely an EB benefit and nothing to do with your IR35 status. This is only based on site working practices and your terms of contract.

[wantacontract]

opted out

erm..i've opted out verbally, but not yet signed anything yet....i was told that via opting out, its a better indicator for being outside IR35...

???

[tim123]

Sounds like a penalty clause and I wouldnt be surprised if they trotted this line out if you told them you were going to engage someone else (of course Im assuming you arent a fool and are opted in?).

Mailman

It is a penalty clause.

But there's nothing in it to suggest that it is an illegal penalty. Penalty clauase aren't de facto illegal. They are only illegal if the sum that they seek to collect is not a reasonable estimate of the actual loss.

tim

[boredsenseless]

It's slanted heavily in the agencys favour, i.e. if anything goes wrong and they lose money, they can claim it back from you. That could include you becoming seriously ill, which is hardly fair. I'd definitely get B&C to check it out, but it's also potentially a good outside-IR35 pointer (evidence of financial risk).

You seem to be forgetting that B&C offer taxation status advice and not employment advice, I'd guess this question is more related to 'will I get paid?' rather than 'does this make me any less IR35?'.

[Mailman]

Sounds like a penalty clause and I wouldnt be surprised if they trotted this line out if you told them you were going to engage someone else (of course Im assuming you arent a fool and are opted in?).

Mailman

[wantacontract]

good advice guys

yeah i like the phrase - actual resulting losses....yup, think I'll stick that in there and live with it...

Merry Xmas to all that replied and assisted

[thunderlizard]

Well I think it still has to be an actual "resulting loss". Meaning that if you merely did a runner then you'd be liable for their lost profits; but if you also torched their building (including the Chicken 'n' Ribs shop that's no doubt beneath them) then you'd be liable for that loss too.

[Denny]

thanks for the feedback guys, I agree that its a good pointer for IR35, I am not worried about doing the job or leaving the contract early for something else....but like mordac says incase of misfortune, they can extort me for silly money....which I don't like....

I am gonna ask them to take it out....or reword it to:

Failure by the Consultancy to adhere to any term of this Agreement shall constitute a breach of contract and shall entitle the Employment Business to claim damages from the Consultancy for any resulting loss suffered by the Employment Business which shall be limited to loss of profit suffered by the Employment Business due to the Consultant not completing the term of this Agreement as specified in the Schedule.

You could change the wording, but in all honesty, an EB wouldn't have a leg to stand on if the money they were extrapolating from you didn't result in genuine loss of profit due to your own negligence or cavalier approach to leaving to take up something better and more highly paid elsewhere. If you were ill or couldn't finalise the contract for a good reason they wouldn't stand a hope in hell. After all, what if the client had terminated early instead of you?