Reply to: Early termination of the contract by client

[northernladuk]

You didn't but open ended log term contracts can be problematic giving you the impression of being just a disguised body. The person being there 4 years should also be taking care of his status, particularly if he's interviewing people as well.
The fact you are expecting them to give work also messes with your Mutality of obligation which is one of the main pillars of defence.
I'm aware all that comes from a B2B contract but if your working practices are like a perm then it trumps the contract.

Anyway, all this is slightly of topic but I do think you need to take a bit more care around Ir35, particularly with the changes coming in April. A client is going to have to shoulder a lot of risk if they are going to deem these types of gigs outside.

[Nancy8]

Person that hired me is a freelance contract worker that has been there almost 4 year

Tl;dr

You shouldn't rely on contracting for guaranteed income. That's not what we do. You shouldn't be in a long term open ended assignment. That's a target for Ir35. You are brought in to do a set piece of work or for a set duration. Open ended smacks of permiedom.

Nothing is guaranteed in contracting. It's the way it is and it's why we get paid a lot of money.

Not nice being canned but it happens.

Person that interviewed and hired me has been working there for almost 4 years.
Didn't ask you about target for IR35. I've been doing freelance since 1992. I have other projects that I do remotely. I did point out that it depends on contract signed. I deal on a Business to business and I didn't refer an employment contract in this forum. The excerpt I posted comes from a business contract.

[northernladuk]

Tl;dr but the advice is always exactly the same. A contract is only as long as its notice period and even that's not really true. It's as long as the client needs you. The day they don't you are done.

There will be a clause in your contract where you get paid for work done. If you don't do any work you don't get paid. They could keep you contract going for ever but never offer you any work. It's the same as instant termination. Every contract had the option to get rid of you immediately. You are kidding yourself if you think they can't.

There is nothing you can do about it and the best option is to do a good hand over, thank them for the work and hope they will call you back in the future. Getting pissy with them will get you in the same place but with no hope of future work.

You shouldn't rely on contracting for guaranteed income. That's not what we do. You shouldn't be in a long term open ended assignment. That's a target for Ir35. You are brought in to do a set piece of work or for a set duration. Open ended smacks of permiedom.

Nothing is guaranteed in contracting. It's the way it is and it's why we get paid a lot of money.

Not nice being canned but it happens.

[Nancy8]

Don't quite agree with responses. I think it all depends on the signed contract.

This happened to me a week ago (received early termination on August 5 2019). I signed a new work contract in June 2019. I left an open-ended long-term contract with a good client only because the new work contract was along the lines of my expertise/speciality. The assignment end date is : December 7 2019.

My contract reads like this:

4. Duration and Termination
4.1 This agreement shall remain in force until the assignment is completed as defined in the Schedule (“Assignment End Date”) unless terminated earlier in accordance with the terms of this Agreement or extended by agreement of both parties under the terms of this Agreement. This clause shall be subject to clause 4.2 below.

4.2 Without prejudice to any other rights and remedies to which the Company may be entitled under this Agreement, the Company may forthwith terminate this Agreement by written notice to the Contractor if:

• either the Contractor or the Client goes into liquidation, or (in the case of an individual) becomes bankrupt, makes a voluntary arrangement with his or its creditors or has a receiver or administrator appointed.

• the Contractor is in breach of any of its obligations hereunder;
• the Client indicates to the Company that it is not satisfied with the performance of the Contractor or the Representative;

• the Representative wilfully or negligently introduces a virus or other harmful code to the Representative’s or Client’s hardware or software used in the performance of the Assignment.

• any criminal records checks, credit checks or references are subsequently received and further to the outcome of such checks the Client does not wish to continue with the Assignment.

If the Representative proves unsuitable to the Client within the first 48 hours of assignment then immediate notice will be given and the Contractor will not charge the Company for any time within the first 48 hours. The Company may terminate an Agreement with one weeks' notice where the term is less than eight weeks, and two weeks' notice where the term is more than eight weeks

---

For the record, when I spoke with agency on the phone - agency told me that client does not have to state the reason. It affected me quite a great deal since it is the first time ever since doing contract work since 1992 that my work contract has been terminated early.

I emailed the person that hired me. He wrote (in an email) primary reason is that the deployment is no longer urgent and that they are able to resurrect the VISA of a resource from India to take over my work.

In fact, I had to do an turnover of my work to this resource.

I never second guessed the quality of my work. I am my own worst critic. So it clearly isn't any one of the bullet points stated in my contract.

I intend to move on and find the next work contract. But damage has been done.
1. I would not have taken the new work contract and leave an open-ended longterm contract if the new work contract stated a short term duration.
2. I would not have taken the new work contract if it did not include at least 6 months duration.
3. I would not have signed the work contract if it stated that they can terminate it for no reason.

[Lance]

I've only known of contractors be criminally bad to not be given their notice period to work out.

Usually it's the contractor asking to go a bit quicker, not the client.

Pretty much the same I see.

The clients, unlike agents, are human beings after all.

The clients usually don’t know what they can or can’t get away with. I try and educate them. I encourage them to offer extensions without budget but end early, and to immediately evict incompetents without hesitation.

[PerfectStorm]

Now I see what people are saying but imagine if it was the other way around.

We get people on here moaning when contractors give notice anyway. Imagine, as a contractor, strolling into client and saying "Im not giving notice I'm off at the end of the day".

Client would be mega wassed off.... Agent would blow his lid as well I expect if it meant they lost a months worth of their margin.

Yes I know the relationship is different but I still thinks its a bit tight when clients do this. OK they're situation has changed but, come on, play fair and just give notice.

If it was we, even though you might not get anywhere, I'd be pushing for that months notice. Whats there to lose? It'd be a good laugh if nothing else.

I've only known of contractors be criminally bad to not be given their notice period to work out.

Usually it's the contractor asking to go a bit quicker, not the client.

[PerfectStorm]

Put it this way, at least you're probably outside IR35 now

[northernladuk]

This. A fixed agreement for a sum paid in an eventuality is fine. Expecting payment against the T&M terms when it wasn't worked isn't.

But good luck getting anything like that in one of our contracts.

[BlasterBates]

A clause in the contract that stipulates compensation in the event of early termination is perfectly normal between businesses and is therefore not a pointer inside IR35. It is no different to a hotel charging a guest for a room who cancels at the last minute.

[NotAllThere]

...so setting the expectation that you will be paid when there is no (more) work to be done....

Tested it in court yet?

Maybe it would fall foul of IR35, maybe not. A clause such as I suggests of course sets an expectation to be paid if there is no more work to be done. That's what it is for. In most contracts for x-months length, there is an expectation on all sides (assuming good faith!) that there will be x-months work. I.e. that work will not run out during the course of the contract. The clause defines what will happen if that expectation is not met.

It doesn't go against MOO. MOO is the obligation to provide work, and the obligation to do work provided. If the clause is invoked, no work is done. Just a small sum in return for terminating early.

As a client, I wouldn't want such a clause, obviously. From the contractor point of view (falling foul of IR35 notwithstanding), it makes good business sense as it provides some protection. What happens then is what happens whenever two parties have different interests. They negotiate and hopefully come to a compromise.

Perhaps the wording would need varying, but I don't think such a clause is immediately and blindingly obviously a non-starter.

[malvolio]

What about something like:

"Unless otherwise negotiated, in the event of the client no longer requiring the contractor's services before the stated end of the contract, compensation to the amount of 5 days' fees will be payable".

...so setting the expectation that you will be paid when there is no (more) work to be done....

Can you see the flaw in that approach? Apart from it making no sense business-wise, especially from the client side, it destroys the minimum level of mutuality argument.


Like I said several times already - learn to think and behave like a business or resign yourself to working inside IR35. It's really that simple.

[NotAllThere]

The contractor would then need a clause stating that a defined number of days work with be required and paid for each month etc.

What about something like:

"Unless otherwise negotiated, in the event of the client no longer requiring the contractor's services before the stated end of the contract, compensation to the amount of 5 days' fees will be payable".

[wattaj]

FFS people, you dont want a notice period and it will not be honoured anyway. That will become even more important next year

Agreed.

I have always requested that contracts only provide for me giving the client notice; they can get rid of me whenever they like: 0 days notice.

Sometime the agent wont accept that as it is inconsistent with the upper contract, but at least I try.

[malvolio]

The tricky bit for contractors is that the client can give the agreed notice to terminate the contract and then say there is no work available during the notice period. The contractor would then need a clause stating that a defined number of days work with be required and paid for each month etc.

Which blows any clauses about mutuality and puts you well inside IR35 territory...

FFS people, you dont want a notice period and it will not be honoured anyway. That will become even more important next year

[Old Greg]

The problem is that most contractors don't have the legal clauses in the contract they require to ensure they're compensated if the contract is terminated early. When I worked for a small company that offered services there was always a clause outlining the amount of compensation to be paid in the event of the termination of the contract.

If you don't have that clause in legal action gets complicated, especially when you have clauses in about only being paid for work actually carried out for the client.

The tricky bit for contractors is that the client can give the agreed notice to terminate the contract and then say there is no work available during the notice period. The contractor would then need a clause stating that a defined number of days work with be required and paid for each month etc.