IR35 & No Right of Termination

[Denny]

Denny, thanks for that most interesting, however surely there are aspects of MOO that have to be written into the contract anyway - i.e. termination terms etc ~?

I would suggest that no MOO is mandatory, whether you are taking on a permie ex role or a specifically constructed contractor role.

What does seem significant is that contractors find out if their roles were previously held by permies because this will have some bearing on how relaxed you can afford to be to follow the 'company code' even if your terms are still IR35 friendly.

In all roles (ex permie or not) I would go for IR35 friendly contracts with all three biggies included in order of preference: No MOO, Rights of Sub (unqualified) no client control (and no hours stipulated), termination either two way 4 weeks with qualifying factors for you to exercise yours (as I've suggested) or none on your side.

If ex permie role being filled by a contractor I would insist on acting in practice your terms as stipulated and make sure you aren't buttonholed into permie like behaviours. if you are, or you suspect that the client thinks that in practice you do have to follow the company regulations, then leave as you have nothing to lose and your contract has been breached anyway (as you aren't allowed to act out the terms of your IR35 friendly contract). Try getting a sub in if you think they will refuse as they probably might if they are taking that attitude).

If non-ex permie role, I would act in practice what your terms are as best you can, but try and fit into standard contractor working hours etc. if you feel comfortable and it helps to oil the palms of your clients even if you'd prefer to exercise the right to work at home. Why risk getting terminated earlier than you might have been or not being extended if you hadn't done this? After all, getting terminated early is probably the equivalent of being stung for IR35 taxes.

[Bluebird]

Denny, thanks for that most interesting, however surely there are aspects of MOO that have to be written into the contract anyway - i.e. termination terms etc ~?

[Denny]

Thanks all. It's nice to be back.

One thing that may be of interest to you all:

I attended a business conference on Wednesday and the 'Jaws' of freelancing poked it's ugly head out of the murky waters yet again - IR35.

Not sure how much this applies to most of you but it's worth noting - if you are not aware of this already:

A representative from another accountancy was present who told me quite specifically that no contractor should ever take on an assignment that is already occupied by a full time member of staff away on leave or left post (gap filling roles). If the role to take on a 'full time post' as a freelancer stand in that hasn't been made redundant then leave well alone. Only take on specific contractor roles that are currently not in existance from permies (even if they are eventually taken on by permies afterwards as proper in-house jobs).

According to this accountant, taking on these roles will leave you vulnerable to IR35 inclusion more so that no MOO, full rights of sub, and client control terms in your contract and will lead to certain failure if an investigation takes place.

According to him, the latter three terms in the contract are of little consequence owing to the failure rate the IR has had in making them stick and that these pointers were 'old news.' However, I challenged him on this as being of vital importance on paper and more so in practice and he then admitted that you did need to act as if you were a business on your own count and even if you were not taking on a gap permie role it's still not advisable to work a 9-5 day if possible (unless for very good reasons that are objectively justifiable). However, he then said that the failure rate from the IR was so high that they were pretty insignificant factors in practice - not so the 'real job' aspect.

Second Opinion:

I got a second opinion from an ICA member accountant and he told me that Qdos and B&C were pretty accurate in their interpretation of what is needed and what isn't.

OK, so I'm confused again. Two different diagnoses.

The only conclusion I can draw is this:

If you are taking on a position previously held by a permie, make sure you baton down all the hatchets in your contract terms and behaviours to clearly distinguish you from your previous permie counterpart.

If you are taking on a specialist role that has been created for the contractor (even if the same role is turned into a permie role after you've gone) then you have a better escape IR35 route automatically factored in, so you can afford to do a 9-5 existance, not even have rights of sub, and even MOO to have a winnable case. After all, there is no one you can be compared to.

Frankly, I would regard this as risky even if the IR success rate is low.

Perhaps someone can qualify my interpretation?

[malvolio]

Oh bugger! I'll have to start checking my answers again...

Wecome back!

[kingshuk]

Hey, welcome back denny!
Great to see you posting again

[Burdock]

Denny- good to see you back

[Denny]

This morning, I had a pimp email me his agency's standard T&Cs with a view to a future gig. Like most 'standard' contracts, everyone has the right to terminate the contract either immediately or with a notice period depending on the circumstances except the contractor.

Whn I asked why the contractor had no right to give notice, he reckons such a clause brings the contract and the contractor into IR35.

Is this right?

No notice is better than an unqualified notice period, but it's not the only option to stay outside iR35. You can have reciprocal notice periods of 4 weeks without jeapordising your IR35 exempt status provided the reasons for your notice are clearly stated around just finishing off deliverables the client wants you to finish mid contract not about keeping busy for the sake of it. For example, if you are extended for 6 months and then after 3 months the project budget is pulled and there is no work left requiring your expertise, then exercising your notice would be inappropriate, as it would imply that you want certain 'rights' to look round for another job without the added financial burdens of being out of pocket - in that case you could spend the next four weeks watering the company's flowers and helping out on overspill work that has nothing to do with your expertise. If, however, someone internal is about to take over your role at short notice, but there is still work outstanding for you, then you can negotiate a four week handover (as per the terms of your contract) to the new internal bod.

A qualifying statement in the contract is fine to make that clear. Business notice is not the same as employee notice.

[malvolio]

In that case he is bulltulipting. Tell him that you want equal rights to cancel the contract as the client.

If he says "that looks unprofessional etc" just tell him its equal rights or no deal.

For my next contract I am seriously thinking of adding in a "if the contract is terminated early a fee of £<pick an amount> will become payable by the client".

As notice periods are not worth tulip.

Really don't get it, do you? You are there to provide a service, as soon as that service is completed the client needs to be able to drop you ( It's called "contracting" ) or else face paying you to do nothing. And since being paid to do nothing equates to Mutuality of Obligation then you are firmly in line to be regarded as an employee and you should be paying IR35 levels of taxation.

Of course, if you really want to be an employee of your client, albeit one without any rights or benefits, then go right ahead. But do not advise others to do the same damn silly thing.

[cojak]

Do not listen to sockpuppet.

If you do want the opportunity to give notice, ask for one month and offer the agency the right to terminate immediately without giving cause.

You're not an employee.

(Unless you want to be, of course...)

[Sockpuppet]

In that case he is bulltulipting. Tell him that you want equal rights to cancel the contract as the client.

If he says "that looks unprofessional etc" just tell him its equal rights or no deal.

For my next contract I am seriously thinking of adding in a "if the contract is terminated early a fee of £<pick an amount> will become payable by the client".

As notice periods are not worth tulip.

[Kyajae]

But the company are still giving notice? Its just that the contractor has no rights at all to cancel the contract if I read that right.

Spot on

[Sockpuppet]

Yes. It is a pointer away from employment, since employees have to be given notice. Nice to find an aency that understands the rules for once. Take it.

But the company are still giving notice? Its just that the contractor has no rights at all to cancel the contract if I read that right.

[malvolio]

Yes. It is a pointer away from employment, since employees have to be given notice. Nice to find an aency that understands the rules for once. Take it.

[Kyajae]

This morning, I had a pimp email me his agency's standard T&Cs with a view to a future gig. Like most 'standard' contracts, everyone has the right to terminate the contract either immediately or with a notice period depending on the circumstances except the contractor.

Whn I asked why the contractor had no right to give notice, he reckons such a clause brings the contract and the contractor into IR35.

Is this right?