Reply to: Advice Please

[leegtr]

"And again, how can you call breach on a contract that doesn't exist? You didn't define the schedule and agree how your business would carry it out. You are contracted to deliver to Project X. You cannot void that contract due to work on Project Y"

- Have I not already admitted this was a mistake on wording about 10 times in this tread and it was a scope change not breach of contract, as pointed out much earlier by someone.

The mistake I made is that I worked on the scope change verbally for a period of time (couple of weeks) and then did not refuse the work until I thought the scope was different to my schedule.

The reason I drew the conclusion that I could work on the project (which was incorrect) was because my schedule mentions other projects can be undertaken if mutually agreeable and this was the first mutually agreeable addition after 16 months of working on the initial project. Although as you can see it did not turn out to be agreeable after a couple of weeks due to the dramatic scope change, which I them considered to be outside of my schedule.

However I can now see (which again I have pointed out before) that basically in future contracts I need to remove the clause and ensure the schedule is simple black and white and if i decide to work on additional projects with clients I will just provide the client with a new quote and form another contract for this piece of work if the quote is accepted.

Overall the contract has worked very well for me to date, as I get the freedom to do what i want when I want to and get to do it my way, which was the reason for starting down this route. I now see the problem on work load I have had for the last couple of weeks was introduced by me with verbal acceptance of something I should never have been accepting but no really harm done and learnt a valuable lesson.

The client today called me in to discuss my concerns that I can't deal with the additional project and the outcome was perfect for me as he thanked me for trying to help out in difficult times but understands. I was going to mention notice/leaving/running away etc but during the meeting the understanding between us was spot on (not what I was expecting) and based on the reasonable respond from the client I will knuckle down and complete the scheduled project regardless of the offer from my friend.

Overall big storm in a tea cup created by me as I tried to help the client, but in reality I needed to ensure I don't muddy the waters because this has caused me some sleepless nights trying to assist and really did not help the client as they lost a couple of weeks, where they could have been looking for resource.

Like I say thanks for the time on offering advice, I believe you have made some false assumptions in your replies, but it is more than likely based on my poor explanations

[northernladuk]

Northernlad you are missing the main point.

No I am not. It's pretty simple and you re-iterate it every time you try defend yourself.

As the projects follow the same frame work (by frame work we are talking sub suppliers and suppliers of project deliverables i.e. I can discuss 2 project outcomes at 1 meeting maybe?)

Irrelevant. Forget framework and generalisations. You are there to deliver to Project X. Period. That's it. Nothing else. Nada.

my company decided it was in a position to action the additional work load (which obviously means additional invoicing which my company likes to do). I was not strong armed, I was not attacked into doing anything.

Rubbish.

I was asked if my company could complete the additional work and I verbally advised yes based on the verbal scope, which as a business I am more than allowed to do.

But you are not. That is the whole point. As a disguised permie you are. You should have a new schedule of work defining exactly what you will be doing. In HMRC's eyes you were asked to do new work just like a permie and so will come to the conclusion you are a disguised perme. Remember we are talking about HMRC and the differences between a permie and business. Accepting verbal work and getting on with it is what permies do. Business write up new terms, contracts, schedules etc. You didn't so are working off schedule at the clients request which looks bad for IR35.

Another crap analogy probably but if I am delivering a parcel to company A I would probably agree to deliver a parcel to company B if it was right next door and the same journey was required as its a no brainer and actual ensures why company can half costs, which increases profit. The mistake I would have made is that the additional work would have only been implied in the contract by my general clause and although invoiced separately and fully traceable as a different work stream it would have needed a contract update (which I probably would not have thought to do without the info here today, although in hindsight it is obvious)

You are right. It's a crap analogy.

As soon as I found the verbal scope and actual scope are completely different (this is not years/ months after starting to review it, its weeks!) I have advised my client that my company is not capable of doing this, which I can do as there is a scope change compared to the verbal request (this is where I initially had wording wrong and was saying contract breach)

And again, how can you call breach on a contract that doesn't exist? You didn't define the schedule and agree how your business would carry it out. You are contracted to deliver to Project X. You cannot void that contract due to work on Project Y.

The point I am making is yes you can do everything you said but you are in great danger of being caught out by IR35.

Let's try it a different way. Let me take a quote from the JLJ case and see if it reminds you of anything...

"However I can see sense in what the judge said [to Mr Spencer]: 'Up to a point you were doing specific bits of work and projects, after that point you were really no different to being a permanent employee.'"

Employment status advisor Kate Cottrell, seconded to the Office of Tax Simplification for the IR35 review, agrees. "This case is indeed the first time we have ever had a split", the Bauer & Cottrell co-founder told CUK.

"It clearly highlights the need to consider IR35 for each and every contract, [at both] extension and renewal. I know of similar scenarios where there was an original project and then the same contractor was offered another role to cover for maternity leave.

Being asked to do something by your client and you saying yes. You fail as now cannot demonstrate you are doing specific bits of work. HMRC will see a contract to deliver Project X, see no mention of Project Y and will come the same conclusion as the first paragraph.

And further on in the commentary..

Such a lack of control is "fine" when the worker is providing expert services (judgement point 23) - on a unique project (point 42), but not, explains Ms Cottrell, when "the engager needs work undertaken repeatedly, and when you are working generally within the organisation."

Given that the classic tests of employment status have not changed, and therefore remain as significantly determining as they were before the case, the advisor believes such a work pattern is the "main" warning contractors should heed.

Mr Mason agreed: "For a contractor, the central message being sent by the courts is that if you're going to engage over a long period, then you really need to be able to show that you're engaged on specific projects.

"[To be outside IR35 you can't] just basically get on with whatever work crops up [from the end-user]. Do that and you risk ending up becoming very much part and parcel of their organisation.

"So if you're not doing separately identifiable and discreet projects, then it's very easy over an extensive period to be perceived as part of the client's furniture. That's what happened here and to my mind, that's Mutuality of Obligation."

Any of that ring a bell?

http://www.contractoruk.com/news/001...ir35_case.html

[leegtr]

Right this is not for this contract but just trying to fully understand items for future.

Now my contract has the usual MOO statements and I just wanted to be 100% sure my understanding is 100% correct. Basically these are in place so that when I finish or client advises a set assignment is finished both myself and the client are no longer obliged to carry on any working relationship.

For instance if I am working on a contract and I complete the contract in 11 months rather than 12 I am more than entitled to discontinue the working relationship as my task is complete. Also if the client informs me that the project is completed in 9 months then equally I pack my bags and move on.

So I am guessing that any MOO statements would override any notice period statements in the fact that it I complete the task or the client informs me it is completed we can both move straight on with no notice needed. Basically if I finish an assignment I would not expect to sit there being paid for notice as I am not employed so I would want to be off getting my teeth into the next contract or taking a well earned break (depending on balance of bank!!)

I can't see I have this wrong but based on a few items I have got wrong I would like to check if you don't mind.

[leegtr]

Northernlad you are missing the main point.

As the projects follow the same frame work (by frame work we are talking sub suppliers and suppliers of project deliverables i.e. I can discuss 2 project outcomes at 1 meeting maybe?) my company decided it was in a position to action the additional work load (which obviously means additional invoicing which my company likes to do). I was not strong armed, I was not attacked into doing anything. I was asked if my company could complete the additional work and I verbally advised yes based on the verbal scope, which as a business I am more than allowed to do. Another crap analogy probably but if I am delivering a parcel to company A I would probably agree to deliver a parcel to company B if it was right next door and the same journey was required as its a no brainer and actual ensures why company can half costs, which increases profit. The mistake I would have made is that the additional work would have only been implied in the contract by my general clause and although invoiced separately and fully traceable as a different work stream it would have needed a contract update (which I probably would not have thought to do without the info here today, although in hindsight it is obvious)

As soon as I found the verbal scope and actual scope are completely different (this is not years/ months after starting to review it, its weeks!) I have advised my client that my company is not capable of doing this, which I can do as there is a scope change compared to the verbal request (this is where I initially had wording wrong and was saying contract breach)

The travel for example. The schedule should say you will be travelling as part of the duties while working on <specific title> project. - My schedule says exactly this as one of the points but also says if agreed by the client and service provider then additional projects can be considered and agreed. This is my choice not the client to take on extra work so I am not sure why you seem to constantly imply it is not my decision to take this work initially. For reference I was asked to work on an additional project early in the year but the project scope was a new development project, for which I refused and the client allocated to employees. When I say refused I advised if they could wait 6 weeks prior to kick off I would ensure I have additional resource to complete but they were not interested in additional resource expenses

Now I really feel that the original question has been lost so this is the summary in my eyes:-

1: I asked if my contact allowed for me to terminate earlier than the end date: - I am now aware I can't from a few on here (which I appreciate) and QDOS who advise I would Probably be in the wrong

So outcome here is I missed vital piece of info from contact so in short my fault and can't terminate early unless I am unreasonable, which I would not be to a client as you can only do that a few times before making a name for yourself in my niche.

2: I believed they could be in breach of contract - Reality is they wanted to change the scope which I agreed verbally but now that the scope is beyond what we verbally agreed I have highlighted it and advised my company can't currently do this in the timescales they want. If I have advised I can't do it then how can they be in breach of contract (again my mistake and hindsight its beyond obvious so my choice of wording was very poor)

So outcome here is I have a stupid clause in the contract schedule that allows this grey area to occur, which in really should not exist so new requests can be treated as new work streams and not additions to an existing work stream. Lesson learned and next contract will be different

3: I have a surprising offer from a friend that is more favourable, and please by that do not take that as just financially better, as time is precious to me at the moment with a young family.

So outcome here is I can't terminate and they are not in breach of contract so if I want out then it need to be on a basis that both parties agree on.

Overal the likely outcome will be that I continue to complete the contract to the original level and then on the next contract with a new company I will rectify the contract mistakes that I made this time around.

Thanks again for all the advice and comments its great when people want to offer advise

Lee

[northernladuk]

I agree and is exactly how it should work but the reality in a many cases is that it doesn't matter what you think you are, it's whether the client will go for it and we all know many won't.

[TheFaQQer]

That's an interesting point at it and I can't remember this point being brought up in our many substitution discussions.

Wouldn't it set a dangerous precedence if contractors do start trying to strong arm clients in to substitution? The easy get out is to remove it and we certainly don't want that.

If you are genuinely a business, then you should be able to win work and then choose who you got to do the work. The client shouldn't need strong arming - the contract is that you can send someone who is suitable to do the work. If you are vouching that the substitute is suitable, then since you are responsible for the work anyway, then it shouldn't make any difference.

[northernladuk]

The analogy was to show a difference as they are not as significantly different as location implies initially

For some back ground info all projects this company complete fall into the same project frame work or have in my experience to date. Although the end user is in UK on one project and abroad on the other they utilise the same sub suppliers (which are global) so for the UK project there is european trips etc, which are part of my schedule of agreed work.

So in essence on paper the 2 projects are near identical on the end result and follow the same foot print, hence my company agreed that simultaneous work could be completed based on the the abroad project being near completion. (I was going to undertake this on the back of the contract clause allowing us to agree additional projects if we were in agreement, but can already see this clause is too grey and the reality is any changes of project need to be captured by title on a revised contract rather than an generalised clause)

After reviewing the "abroad project" my company (me) has decided to reach a successful conclusion it needs to significantly deviate from the "standard" frame work given that there are a large number of issues and given the stage of the project they need to be corrected onsite. Given this is not possible under my scope currently I advised client of the issues they have and I am awaiting a response.

Convince yourself all you want. You are not brought in to follow a framework. That is what permies do. The travel for example. The schedule should say you will be travelling as part of the duties while working on <specific title> project. That means this clause is NOT transferable to another project.

You are confusing a job description with a detailed schedule of work. This is one of the key points for IR35 so I would start being a little more careful. The devil really is in the details here. You are there to do a piece for work for project X. Not follow a framework as the client requires.

So in essence on paper the 2 projects are near identical on the end result and follow the same foot print, hence my company agreed that simultaneous work

That is exactly how a company treat permie resources.... so you see your problem? You have to try your best to be different to permies. This is not that.

If you are not going to be brutally honest with yourself here you are opening yourself up for a world of problems. Bottom line, you took on extra work with a client at their request with no schedule. You're ****ed.

[northernladuk]

If they refuse to accept a substitute, and the substitution clause is worded correctly, then you would have a case for them breaching the contract. The ability to send a substitute is a fundamental part of the contract for services between the client and the company - if you have an unfettered right of substitution and they refuse to allow that, then they are in serious breach which would give you the right to terminate (and potentially sue for damages).

That's an interesting point at it and I can't remember this point being brought up in our many substitution discussions.

Wouldn't it set a dangerous precedence if contractors do start trying to strong arm clients in to substitution? The easy get out is to remove it and we certainly don't want that.

[leegtr]

The FaQQer,

The wording is suitable but I just believe the reality of substitution is not as straight forward in the real world. For instance I would actually source another PM for the other role as that would make more sense if I was looking to grow the company to more than 1 PM at the moment.

Conteras,

I do agree I have confused breach of contract with breach of spec, because they can only breach the contract on a spec change if I allow them to, which then implies there has been no breach as I have allowed it. Breach of contract has been a poor choice of wording from me.

To be honest I am grateful to people taking the time to reply

[leegtr]

The analogy was to show a difference as they are not as significantly different as location implies initially

For some back ground info all projects this company complete fall into the same project frame work or have in my experience to date. Although the end user is in UK on one project and abroad on the other they utilise the same sub suppliers (which are global) so for the UK project there is european trips etc, which are part of my schedule of agreed work.

So in essence on paper the 2 projects are near identical on the end result and follow the same foot print, hence my company agreed that simultaneous work could be completed based on the the abroad project being near completion. (I was going to undertake this on the back of the contract clause allowing us to agree additional projects if we were in agreement, but can already see this clause is too grey and the reality is any changes of project need to be captured by title on a revised contract rather than an generalised clause)

After reviewing the "abroad project" my company (me) has decided to reach a successful conclusion it needs to significantly deviate from the "standard" frame work given that there are a large number of issues and given the stage of the project they need to be corrected onsite. Given this is not possible under my scope currently I advised client of the issues they have and I am awaiting a response.

[TheFaQQer]

The reality is a subbing another PM is never really a viable option but I can use it as an example to show what my company can do if it believes that is the correct course of action although the client can disagree with any sub PM all day long so the reality is you are correct.

If they refuse to accept a substitute, and the substitution clause is worded correctly, then you would have a case for them breaching the contract. The ability to send a substitute is a fundamental part of the contract for services between the client and the company - if you have an unfettered right of substitution and they refuse to allow that, then they are in serious breach which would give you the right to terminate (and potentially sue for damages).

[northernladuk]

No my schedule defines a project name and a schedule of tasks I have to execute on that project (list of 10 clearly defined tasks)

The 1st mistake I have made is adding a clause saying the another other projects will be reviewed by the client and service provider on an as required basis to determine if the service provider can undertake these as long as the tasks fall within the stated schedule tasks. The 2nd mistake was saying yes to another project on the back of dud client information, but given I have found the required scope to be different to my existing schedule and different to the verbal agreement my company is within its rights to not do this.

QDOS are more than happy with the schedule and the way I work but I have made 3 errors in my opinion. the 2 above and the no termination period in the contract.

.

I am a little surprised QDOS didn't pick that up but in their mind it could be acceptable if done properly. The problem is you didn't do it properly. You were asked to take another piece of work on in parallel to your own which is D&C if I have ever seen it.

tasks fall within the stated schedule tasks

If you have a clearly defined schedule for project A how on earth can anything else i.e. project B fall in to it. It can if your schedule is 'PM anything the clients asks for' which is a fail. Your schedule should be tight enough that you can't be accused of taking on other work for the client and be seen as a disguised employee by HMRC. In this case you clearly can. Complete **** up.

You should have agreed a completely new schedule with very precise tasks that cannot be ported to other work. Even then I would argue HMRC are will see straight through that. Creating paperwork to suit working practices is pretty much a fail. They will speak to your client and he will say 'Yeah we asked him to do this cause we were short' and no amount of paperwork or contracts will save you.

The reality is a subbing another PM is never really a viable option but I can use it as an example to show what my company can do if it believes that is the correct course of action although the client can disagree with any sub PM all day long so the reality is you are correct

The situation you are describing is called a sham clause and has been tested and failed in court. If the client refuses it or there is any indication the client will not accept then again the working practices completely trump the paperwork and you don't have a leg to stand on...

Working practices always trump the contract. If you had it right from the off the contract should state the exact intention of both parties. What is the point of having a contract with a clause in it that both you know won't stick? It's pointless.

[leegtr]

No my schedule defines a project name and a schedule of tasks I have to execute on that project (list of 10 clearly defined tasks)

The 1st mistake I have made is adding a clause saying the another other projects will be reviewed by the client and service provider on an as required basis to determine if the service provider can undertake these as long as the tasks fall within the stated schedule tasks. The 2nd mistake was saying yes to another project on the back of dud client information, but given I have found the required scope to be different to my existing schedule and different to the verbal agreement my company is within its rights to not do this.

QDOS are more than happy with the schedule and the way I work but I have made 3 errors in my opinion. the 2 above and the no termination period in the contract.

The reality is a subbing another PM is never really a viable option but I can use it as an example to show what my company can do if it believes that is the correct course of action although the client can disagree with any sub PM all day long so the reality is you are correct.

[Contreras]

This is my mistake it was verbal acceptance on my behalf and is still within the frame work of the schedule but the best explanation I can think of is as follows:- My company is engaged to move a sack of spuds into another field and my company has an order / contract for this. On arriving at the field the client asks me is it ok to move a sack of oranges as well, I verbally reply yes as I am here that is fine as long as the same hourly rate applies. Now when I get to the field there is 10 bags of oranges. This is the stage I am at with my current contract now! and in my eyes I can fully refuse to do this and just move the spuds as contracted but if the client (which they will) says move them all as I have no one else to do them I can say"er no" that would breach my contract so we either revert to the bag of spuds or my company will cancel the complete contract on good grounds.

I could have declined the new work but would not be able to cancel the contract if they say ok just do the original work then as there would be no breach

Not a breach of contract at all. It's simply "outside the scope of the agreed schedule".

The analogy is poor, IMHO. Based on what you have said the two projects sound distinctly different, UK-based vs. off-shore. It's more like you were asked to move a sack of different fruit in a different field on a different farm.

The fact you went ahead and complied, and continued for some time, working outside of what was formally agreed, HMRC will say, is because you have become "part and parcel" of the organisation.

That's not what you want to hear, I'm sure. In your opinion that's not how it was, but what do you have to point to? An email, perhaps? This is classic IR35 fodder.

It seems you don't actually want to return to the original schedule as you have richer pickings elsewhere. In view of that maybe it would be better simply to serve 'reasonable' notice and focus on bringing tasks to a natural conclusion as best you can and an amicable handover of the remaining work.

[northernladuk]

Anyway that makes the choice easy now as I will go next week and negotiate a notice period and if the say no I will inform them my company is assigning me to another task but they will be receiving a new guy to complete the contact under substitution clause

Good luck with the sub clause. If they won't agree a negotiate a termination you will have your work cut out to sub...

That aside. You won't have any trouble negotiating an exit. As I said before clients don't want contractors there that don't want to be so is in their best interests.

Did you speak to QDOS about your extra work situation. From your example your schedule sounds pretty flaky. It should say exactly what you are doing i.e. what work on what project. If your schedule says PM work for your client then that sounds more like an employment contract than a work schedule.