Reply to: Are you opted out or opted in?

[malvolio]

That's right, malvolio, and you might also argue that people like yourself who post advice here should understand the rules well enough to know that there is never any advantage to a contractor in being opted out of the regs.

Boo

Actually I haven't expressed an opinion either way. What I have said is that the supposed protections they offer are largely illusory and easily circumvented. Whether or not you want them on your side in case of a dispute is a whole other question; I guess they would do no harm, provided your contractual terms haven't significantly suffered as a result.

It will also be interesting to see how the Regs align with the AWD in 2011. The AWD won't apply to LtdCo contractors, which may then make the Regs totally out of thier scope. MEanwhile umbrellies will have a different set of problems.

[Boo]

Fair enough. Although you could argue that if people want the benefits of being a freelance and the option for extra income that gives you. they really ought to make the effort to understand the rules

That's right, malvolio, and you might also argue that people like yourself who post advice here should understand the rules well enough to know that there is never any advantage to a contractor in being opted out of the regs.

Boo

[malvolio]

Fair enough. Although you could argue that if people want the benefits of being a freelance and the option for extra income that gives you. they really ought to make the effort to understand the rules...

A lot of the problem is that the agencies aren't pressed by us to do their job properly; make too much of a fuss and they simply move on to someone more complacent.

[Wanderer]

I do respect your knowledgeable opinions and I think the PCG has done a lot of good things for freelancers. But in my opinion this isn't one of them.

A small history lesson may be in order. PCG represents freelance workers, who do not actually want nor need employment level protections. They negotiated the opt out becuase that was what the membership wanted them to do; a significant number of them felt that adherence to the regs would have a damaging effect on the way their businesses worked. Opting out of the regs in their entirety merely emphasises that they are not employees, and in return gives the opportunity for negotiating a more favourable contract in return for saving the agency some work.

I don't have a vast experience of contract terms and conditions but my relationship with the agency is the exact opposite to that. My contract has clauses for both opted-in and opted-out so I can see exactly what my contract would have looked like if I opted out. If I If I opt-out, I have a longer tie in with the agency and they can refuse to pay me if the client won't sign my time sheets. Why on earth would I want to opt out then? I suppose I could opt-out and then try and negotiate the clauses out of the contract but why bother?

As for the "benefits" of the opt in, there aren't any. The handcuff duration clause is immaterial unless you're trying to go direct (and then there are simple and fair remedies, assumiing you want to follow them).

Yes, and who wouldn't go direct given half a chance? More money and less aggro from the agency with their stupid tricks. I'd go direct in a heartbeat if I could and anything that limits the amount of tie in from an agency is a good thing in my book. Note that this clause will also give some protection if you want to switch agencies too. What if you have a problem with your agent and want to switch? If you are opted out then there could be very heavy fees to pay to buy your freedom. Opted in, it's much more limited.

It also limits the contract to perm fee (perish the thought, but some people may do this) which could make the difference between you getting a permie job or not.

Also, if a freelancer is running a "proper business" (and face it, 90% of us are not) then they would generally be wanting to go direct with their clients as soon as they could. Opting in makes it a lot easier because you could be introduced by an agency, do a few months work then come back in a few weeks and go direct with the client to cut the agency out of the deal. Now many clients won't engage contractors directly, but if you are a bonafide small business then they are much more likely to - even if you were initially introduced through an agency.

Agencies invariably pay you before they get paid themselves; if they don't you have a muich bigger problem to worry about in that the agency is about to go tits up and won't pay you anyway. Nothing else in the regs helps the true freelance or incorporated worker, which is as it should be; we don't need that help.

I think we do. A lot of people get screwed over by unscrupulous agencies who would try and put it in the contract we don't get paid until the client pays them. If the client goes bust then the contractor doesn't get paid. The regulations offer some protection against this. Even as a business man running a small business, I'd take this option.

The point is moot anyway, IMVHO. The contractor that feels the need for the supposed protection of the Regs offer merely has to do nothing (or be ignorant of them, which is pretty commonplace as well) and they will automagically be opted in. Thiose who actually understand them and what they mean will also know how to be outside them. So what, exactly, is the problem?

Unscrupulous agencies bullying or bluffing people into opting out (or thinking they have opted out) then ripping them off. The trouble is that not everyone is as streetwise as you, sir!

[malvolio]

...snip...

IMO the PCG is largely to blame for this: they have succeeded in doing the agencies' work for them in bringing about arrangements to exclude contractors from the protection given by the regs while offering them no advantages whatsoever in respect of an IR35 defence. It seems to me that the palaver over introduction/supply is a smokescreen for the PCG to avoid having to admit their mistakes in this respect.

Boo

A small history lesson may be in order. PCG represents freelance workers, who do not actually want nor need employment level protections. They negotiated the opt out becuase that was what the membership wanted them to do; a significant number of them felt that adherence to the regs would have a damaging effect on the way their businesses worked. Opting out of the regs in their entirety merely emphasises that they are not employees, and in return gives the opportunity for negotiating a more favourable contract in return for saving the agency some work.

The reason it's become an issue is because the agencies - not the client, not HMG and certainly not PCG - want to have the best of both worlds, by "persuading" incorporated workers to opt out so the agency can have a much freer rein on the contractual conditions and so reduce their business risk and the work they have to do. Luckily, 99.7% of them don't get it right so the worker is opted in by default. Not that it matters a damn, since the status of the opt in/out has never been raised in court and in the situations where it might actually have a bearing - there are dozens of examples on these boards, for instance - the worker is invariably trying to claim employee rights of some kind, not IBOYA ones.

As for the "benefits" of the opt in, there aren't any. The handcuff duration clause is immaterial unless you're trying to go direct (and then there are simple and fair remedies, assumiing you want to follow them). Agencies invariably pay you before they get paid themselves; if they don't you have a muich bigger problem to worry about in that the agency is about to go tits up and won't pay you anyway. Nothing else in the regs helps the true freelance or incorporated worker, which is as it should be; we don't need that help.

The point is moot anyway, IMVHO. The contractor that feels the need for the supposed protection of the Regs offer merely has to do nothing (or be ignorant of them, which is pretty commonplace as well) and they will automagically be opted in. Thiose who actually understand them and what they mean will also know how to be outside them. So what, exactly, is the problem?

[Boo]

If "Introduction" and "supply" were the same thing then why would the use two different words for the same thing?

Because there are 2 separate cases to consider :

1. Introduction of a worker into the Clients' workforce
vs
2. Supply of services where a Consultant works from and provides services from their own offices.

The reason they must (I believe) be equivalent stages in the process is because that is the point at which contractual obligations will commence in the respective situations. It is clear to me that the whole point of this clause in the regulations is to ensure that the opted in / opted out status is determined before the contract commences, and not retrospectively applied by the agency.

The contrary (introduction == interview) interpretation seems extremely tenuous to me because :

a) Why would Parliament have insisted on the opted in/out status to be settled before the substantial contractual negotiations began ?
and
b) What happens if the Consultant was already known to the client ? Are you arguing that a Consultant cannot opt out of the regs if the original agent that put them forward ducks out (for whatever reason) before ever signing a contract and they end up going through a different agent ? Why would a judge buy that argument ?

But as you say, that would ultimately be for the courts to rule on....

I agree, but would you want to argue before a judge that Parliament meant that opted in/out status had to be decided before any other contract negotiation whatsoever ? I wouldn't, especially when there is such a coherent and obvious alternative explaination.

Finally, I just want to say that the whole opt-out discussion has been obscured by irrelevant emotional obscurantism regarding its effect on IR35 status. It is completely clear that for all practical purposes opt out status wrt the regs has no effect on IR35 status. This is because the case where opt out can occur is precisely the case where IR 35 applies. Ie the opt out occurs where the workseeker is a (universally Ltd) Company. Which is exactly the case (presence of an intermediary) that IR35 catches.

IMO the PCG is largely to blame for this: they have succeeded in doing the agencies' work for them in bringing about arrangements to exclude contractors from the protection given by the regs while offering them no advantages whatsoever in respect of an IR35 defence. It seems to me that the palaver over introduction/supply is a smokescreen for the PCG to avoid having to admit their mistakes in this respect.

Boo

[Wanderer]

"The Regulations do not define an introduction but for the proper operation of this regulation, it is advisable to treat the date on which the work-seeker actually becomes employed or engaged by the hirer as the date from which the three month period should be measured"

As stated in the guidance notes, there is no explicit definition within the regs as to what introduction means in that context. This allows any court testing this to use their own definition, and it seems to me to be crystal clear what it will mean in practice : Introduction of the Consultant into the Client's Workforce.

Reading on it says:

There may be occasions when an introduction has been made under the employment agency terms of business with that hirer some considerable time prior to the date on which the work-seeker actually becomes employed by that hirer.

Reading that, it sounds to me like the "Introduction" is the interview stage and "supply" is when the worker actually provides the services. If "Introduction" and "supply" were the same thing then why would the use two different words for the same thing?

But as you say, that would ultimately be for the courts to rule on....

[malvolio]

Sigh...

Yes, PCG and DBERR. IF you do a little reaserarch you will find I've held the same opinion for around three years now and it is shared by various equally competent commentators. But clearly there's no point in arguing, so I won't.

[Boo]

I'm not. It's not defined so there is no right or wrong.

OK, so maybe I should have said "you will be wrong", but that doesn't affect the fact (for fact it will be ) that you are not right

Fine. You are welocome to your opinion. However my informed opinion is based on first hand discussions with the people who framed the opt out and who understand the rules quite well.

You bin talkin' to the PCG ? That would explain your mistake.

"Introduction" remains undefeined and therefore open to interpretation. I'm quite happy to stick with my interpretation. YMMV.

Well, ISTM that very often your interpretation is presented as fact, without the caveats you express in your post, so I hope you can understand it if I am a bit polemical in my defence of the other view.

Especially since it is (or will be ) right.

Boo

[malvolio]

I believe you are wrong.

I'm not. It's not defined so there is no right or wrong. As I said earlier, using the same piece of the legislation as you quoted (or did you miss that bit?)

Any other interpretation is just stupid IMHO.

Boo

Fine. You are welocome to your opinion. However my informed opinion is based on first hand discussions with the people who framed the opt out and who understand the rules quite well. "Introduction" remains undefeined and therefore open to interpretation. I'm quite happy to stick with my interpretation. YMMV.

[Boo]

Boo are you going to argue with the learned persons I use to review my contracts?

You have never seen a written legal opinion, from a qualified solicitor, as to the meaning of the word "introduction" in that paragraph of the agency regs.

So what's your point ?

Boo

[SueEllen]

I believe you are wrong.

Boo are you going to argue with the learned persons I use to review my contracts?

Go ahead.

Though personally I've learnt don't argue with solicitors or barristers.

[Boo]

Sadly that's not what the law says. The critical point is when the client knows who you are

I believe you are wrong.

The regs are available online here. The relevant extract is as follows

"(9) Subject to paragraph (12), paragraphs (1) - (8) shall not apply where a work-seeker which is a company, and the person who is or would be supplied by that work-seeker to carry out the work, agree that they should not apply, and give notice of that agreement to an employment business or agency, provided that such notice is given before the introduction or supply of the work-seeker or the person who would be supplied by the work-seeker to do the work, to the hirer."

There is a gloss on the regs here. The relevant extract from that (taken in another context) is

"The Regulations do not define an introduction but for the proper operation of this regulation, it is advisable to treat the date on which the work-seeker actually becomes employed or engaged by the hirer as the date from which the three month period should be measured"

As stated in the guidance notes, there is no explicit definition within the regs as to what introduction means in that context. This allows any court testing this to use their own definition, and it seems to me to be crystal clear what it will mean in practice : Introduction of the Consultant into the Client's Workforce.

Any other interpretation is just stupid IMHO.

Boo

[malvolio]

Sorry grammatical error - should have said "isn't".

I had to take part in a telephone meeting immediately after I posted.

Damned clients - always getting in the way of the real work.

[SueEllen]

Is this an example of feminine logic or am I missing something?

Sorry grammatical error - should have said "isn't".

I had to take part in a telephone meeting immediately after I posted.