Reply to: Contract - Tied in for 6 months - IR35?

[Vito]

Different scenario. In that case you would be stupid not to have negotiated penalties for consequential losses caused by the client's early withdrawal from the contract. (In fact you'll probably find something along those lines in the contract from you to the client but not the other way round.)

You are perfectly at liberty to try for such a clause in your contract, of course, if you can get away with it. But don't call it a notice period, because that's not what it is.

That was my point earlier and is all down to wording...I have an early termination penalty clause in my current contract which i insisted on...which is 25% of the remaining contract value from the date of termination. As you say, this is not a notice period as there is no requirement to work for this 25%...

Apologies if my earlier wording was not clear...

[malvolio]

Different scenario. In that case you would be stupid not to have negotiated penalties for consequential losses caused by the client's early withdrawal from the contract. (In fact you'll probably find something along those lines in the contract from you to the client but not the other way round.)

You are perfectly at liberty to try for such a clause in your contract, of course, if you can get away with it. But don't call it a notice period, because that's not what it is.

[Vito]

The client wants someone to do a piece of work. A supplier wants to do that piece of work in return for cash. The client wants to stop spending money as soon as the piece of work is done. The supplier wants to keep the job running as long as possible, even if there is no work to do, because he wants to earn money at it. The client wants to be able to swap out the supplier if they are not upto the job. The supplier wants to be protected form being swapped out if he is not up to the job. Now assume you're the client and it' s your money. Which side should have the right to pull the plug and which shouldn't?

It's your approach that's at fault. You are only there to deliver one piece of work up to a cost. (ignore your day rate and the rest, the client will have budgeted a fixed sum of money for the work and will want to spend as little as possible of it). As soon as you have delivered, or are clearly going to fail to deliver, you're history. However, you do not have the right to walk out early if you're bored or whatever. Nor should you get compensated for delivering early or for failing to deliver - in the former case you should have negotiated a performance bonus, in the latter why the hell should you?

Understand now?

And we just saved you 20% on your tax bill...

So what happens if you contractually agree to do a fixedpiece of work (i.e. deploy a new retail system to a store estate) and you line up a number of contractors to work for you on this project and all of you have refused other opportunities to complete this 6 month rollout...then one month in the client decides the system has been proven flawed on the stores so far deployed and cancels the contract. Are you suggesting there should be no compensation and they should just be able to change their mind at any point?

[tim123]

Tim123, my dear friend, I disagree with you. .

You can disagree all you like.

Such a clause is still perfectly legal in a B2B contract.

tim

[malvolio]

The client wants someone to do a piece of work. A supplier wants to do that piece of work in return for cash. The client wants to stop spending money as soon as the piece of work is done. The supplier wants to keep the job running as long as possible, even if there is no work to do, because he wants to earn money at it. The client wants to be able to swap out the supplier if they are not upto the job. The supplier wants to be protected form being swapped out if he is not up to the job. Now assume you're the client and it' s your money. Which side should have the right to pull the plug and which shouldn't?

It's your approach that's at fault. You are only there to deliver one piece of work up to a cost. (ignore your day rate and the rest, the client will have budgeted a fixed sum of money for the work and will want to spend as little as possible of it). As soon as you have delivered, or are clearly going to fail to deliver, you're history. However, you do not have the right to walk out early if you're bored or whatever. Nor should you get compensated for delivering early or for failing to deliver - in the former case you should have negotiated a performance bonus, in the latter why the hell should you?

Understand now?

And we just saved you 20% on your tax bill...

[pippo]

They are perfect normal B2B clauses and entirely legal.

Tim123, my dear friend, I disagree with you. If there's an agency involved, as i think in this case, then i would be very surprised that an agency can legally tie a contractor into a 6-month contract. It would be useful to hear a legal expert opinion on this matter. If the client can decide from one day to the next to terminate the contract so should the contractor! This can still be a B2B relationship, but a fair one, not a relationship where you have one party dictating all the rules. Any business (be it a small, medium or big business) should try and have contracts that protect its interests and/or minimize its risks.

Also there're a number of us fellow contractors in this forum that are working through a PAYE umbrella company or even with their own Ltd company but inside IR35. In these situations, having such unfair and risky clauses in the contracts does not make sense: they should be avoided at any cost because they don't provide any benefits, they are a benefit only for the agency or end client!

For those of us that work through a Ltd company but outside IR35, then yes one would want to show a certain element of business and financial risks in the contracts. But even in these situations these clauses are not needed in my opinion, as the risk is too high. There're plenty of other factors in the real working relationship and in the contract clauses that are used to determine the IR35 status.

[tim123]

involve the career planning of various consultants

LOL, You've obviously never worked for a consultancy.

tim

[tim123]

Why would you want to accept such a clause?

Because you are a business supplying a service. It is perfectly normal business practice for the customer to expect the supplier to agree to finish the job. Would you employ a plumber to re-fit your bathroom if he could contractually decide to walk off the job (yes I know that they do do this, but you want the contract written to make them in breach if they do).

These clauses are unfair and (probably) illegal.

They are perfect normal B2B clauses and entirely legal.

If you want to work on 'employee' terms, get a perm job.

tim

[pippo]

Yah - the contract is 6 months. So basically you have to do the whole thing or you in trouble boy.

Why would you want to accept such a clause? I don't have a particular problem with the fact that a client could terminate the contract immediately but that should be both ways. I would feel really uneasy in starting a contract without having the option of terminating it (if I don't like the gig) by giving the agreed notice, being it 0 days notice (no notice), 2 weeks notice or 4 weeks notice. The client/agency wants to have the cake and eat it too! Tell them to **** off! If I was you I would walk away: I would not take such a contract. These clauses are unfair and (probably) illegal.

[Vito]

And your point is? You signed up for three months work at £300 a day and you've been dropped after two, so not earning £6k is not a financial penalty?

It is that simple. No notice is no MOO is no IR35. Notice is for permies and wimps.

The financial penalty is the other way around...Jesus, have you got a BH hangover!

If you as a client signed up one of the large consultancies to deliver a 12 month piece of work for you and then after two months you no longer wanted them to continue, you would have to pay an early termination fee (I know this as I used to use them).

So...notice periods no...financial penalties for early termination...too bloody right

[malvolio]

And you miss mine, but never mind.

By insisting on working a notice period when there is no work for you to do, you are turning yourself into someone who works on the same basis as an employee. Your choice, but not a position I would want to be in.

You can of course put penalty clauses in your contract, but I suspect they will not be agreed to by the client or agency.

[Moscow Mule]

And your point is? You signed up for three months work at £300 a day and you've been dropped after two, so not earning £6k is not a financial penalty?

It is that simple. No notice is no MOO is no IR35. Notice is for permies and wimps.

You seem to have missed Vito's point.

If I were to terminate my telephone service contract, I would undoubtedly have to serve some notice period.

The purchaser of the service should pay a penalty when terminating a contract for services early.

What is the difference whether the service supplied is a telephone or a consultant?

[malvolio]

And your point is? You signed up for three months work at £300 a day and you've been dropped after two, so not earning £6k is not a financial penalty?

It is that simple. No notice is no MOO is no IR35. Notice is for permies and wimps.

[Vito]

It is really IR35 neutral as it stands. If they want that level of notice and you want a good non-IR35 defence, ask them for a zero days notice period. Only employees have to be given notice, suppliers can be dropped at any time.

Not sure its quite as simple as this...suppliers can be dropped at any time it is true, but rarely without financial penalties.

[Bluebird]

Reuters are paying £1 per hour for contractors to work in gdansk in poland

so what ?

it's all relative.