Mutuality of Obligation + Furlough Periods - RALC

[northernladuk]

Hmmm, I looked at it as them offering me a contract of x days at a daily rate which I accepted, and them forcibly removing then right for me to be paid for those days. I took this as an indication of them not having to supply me with agreed work within the contract dates.

Coupled with the fact that they cant enforce the same conditions to their permy employees.

Spin it around. If you wanted some time off and they said no how would you feel about. You can't do business with restrictions like that in place. We work on a T&M basis. Work a day, get paid a day, rinse and repeat. If it was forced like that we'd be on fixed price. Many clients get contractors in because we are more flexible than their workforce, not less.

[WTFH]

I took this as an indication of them not having to supply me with agreed work within the contract dates.

You’re the supplier, not them!

If you’re expecting them to “supply you with agreed work”, that would be S, D & C all in one box.
Supervision: They are supervising/telling you how to run your company.
Direction: They are directing you to not work at particular times
Control: They are telling your company to submit invoices when you are not doing work for them.

[Blert596]

In my opinion that’s not good!
Being told to submit “non billable invoices” for a period means that the company is expecting you to raise paperwork for doing nothing when you’re not “working” for them.

Don’t submit invoices. You’re doing no work. If you want to make it look better, then get a client you can work for during that period. Even if it’s helping out at a local pub for a week - get them to pay you as a supplier and put it through the company books.

Hmmm, I looked at it as them offering me a contract of x days at a daily rate which I accepted, and them forcibly removing then right for me to be paid for those days. I took this as an indication of them not having to supply me with agreed work within the contract dates.

Coupled with the fact that they cant enforce the same conditions to their permy employees.

[northernladuk]

In the RALC notes it's stated:

"While the obligation to provide work beyond the date of the contract is irrelevant, the obligation to provide work within the dates of the contract is highly relevant"

I've read on here (from NLUK I think) that a furlough period isn't relevant for MOO but I don't understand why not?

Surely if within the contract dates the client doesn't provide work, then that falls into the above scenario?

You've picked on a very complicated area of the law and represented it with one sentence and then tried to use that as an argument as to why you think furlough is demonstrating MoO. It's so overly simplified it's quite difficult to answer.

Firstly. Look at the term furlough. It's derived from employment and service.
FURLOUGH | meaning in the Cambridge English Dictionary

So it's a permie term really. If permies can be furloughed then it's not really much to do with MoO. It's also likely perms get paid during furlough which we are not. So really it's not furlough at all. It's just a period you are not required to work due to business constraints. You do exactly the same in reverse. When you go on holiday your LTD is unavailable due to business constraints, it's employee is absent, which is the same thing. You can't claim MoO in a contract because you take holidays. That would be ridiculous.

So no, time off during shut down periods isn't anything to do with MoO. It is, however, as already pointed out, useful defense showing financial risk and a difference from perms that they get paid and you don't so document it and store it. It's a long way off a silver bullet though.

To answer the points about RALC you need to read it very carefully and not cherry pick the points you want.

“There is a very clear distinction here. And Mr Alcock is clearly self-employed, because he fits the latter sequence of events. He agreed the work to be done, and only that work to be done. Then he got to work, and worked very hard indeed to meet the outcome goals. And then he billed only for the work done. His contract specifically states that he can only charge for work actually completed. And to top it off, in one instance they did cut the project short at a moment’s notice, and he was not paid.

So there is an obligation do to the agreed work. Time off either way during the agreed work is just part of the T&M way we work, not really part of an obligation.

They also cut a contract short. Not had time off or asked not to work over xmas. That is the key thing here. The work dried up, they didn't give him a new project or asked him to do different tasks, they finished him. No more work AFTER his current work finished. That is MoO (or absence of).

It also mentions it's a carbon copy of another case. If you follow the link and then look at the court docs for this there are some telling comments. Yes it does mention the odd 'provide work' here and there that could be applied on a daily level but there are other telling points such as.

Mutuality of obligation
112. In Usetech at [60] the Court said:
“I would accept that it is an over-simplification to say that the obligation of the
30 putative employer to remunerate the worker for services actually performed in
itself always provides the kind of mutuality which is a touchstone of an
employment relationship. Mutuality of some kind exists in every situation where
someone provides a personal service for payment, but that cannot by itself
automatically mean that the relationship is a contract of employment: it could
35 perfectly well be a contract for free lance services.”
113. On the particular facts of this case I take the view that although Mr Wells
provided his services for payment, the mutuality of obligation does not of itself
demonstrate a contract of services. The DWP paid Mr Wells a daily rate for the work
carried out in accordance with the agreed rate as invoiced. There is no contractual
40 obligation beyond that. The internal recruitment document sets a daily work minimum
30
of 7.5 hours which accorded with Mr Lemon’s evidence. However I am satisfied that
it was no more than an expectation as to the hours that would be worked each week
and I accept the evidence of Mr Wells that the daily rate was paid irrespective of the
hours worked.
5 114. HMRC relied on the HMRC Questionnaire as support for the proposition that
Mr Wells was obliged to work core daily hours. However I take the view that no
weight should be attached to this document which was completed after the period
with which I am concerned and for the purpose of HMRC’s enquiry. I am satisfied
that the document would not form any part of the hypothetical contract.
10 115. Each contract lasted a short duration. The break between the penultimate and
final contracts of approximately 2 weeks indicates that there was no contractual
obligation for the DWP to provide continuous work. It was also clear from the
evidence of all of the witnesses that Mr Well’s engagement did not extend beyond the
specific project in respect of which his skills were required; as Mr McDonald
15 explained once the task was completed there was no role for Mr Wells to fill. The
position as borne out by the facts is that there was a period during which one contract
ended and the DWP was under no obligation to continue to offer a further contract.
No further work was offered for a short period. Moreover Mr Wells was under no
obligation to perform the work and in relation to the final contract Mr Wells
20 terminated the final contract when a better offer presented itself.
116. The essence of the relationship was that there was no continuing obligation on
the part of the DWP to provide work; if it chose to abandon the project there was no
contractual basis upon which Mr Wells could demand further work. I am satisfied that
these factors point away from a contract of service.

It's all pretty relevant but I've highlighted the terms the demonstrate work AFTER current assignment is completed. Furlough wouldn't have met any of those bolded terms so can easily read in to it that using furlough as proof of MoO would fail.

It's very complicated and hotly debated so I'm sure there will be other pinons proving furlough is demonstrating lack of MoO along shortly so there isn't a crystal clear answer for the OP if he's working on one sentence explanations of the situation.

[eek]

I don’t have a problem with submitting a zero hours timesheet on the client’s system, but to be dictated to that my company needs to submit a zero value invoice is the step I think is too far.

It depends how stupid the accounts system reporting is. I can see the logic we have a order for 50 days over 13 weeks - we want invoices for all 13 weeks to allow us to identify when the work was done. It even works for 60 days over 13 weeks before furlough - we want invoices to show that over the 13 weeks you've only billed 50 days including a zero invoice for the 10 days you didn't work.

The problem here is that you expect firms to be sane - personally I expect them to do things in random ways because someone somewhere 0nce thought it was a good idea (and that person could be the Manager of someone 30 years ago).

[WTFH]

It's a non-billable invoice equivalent to a timesheet for a period of time.

And I've often had to submit zero hours into a timesheet system so that the missing data didn't break other badly written reports.

I don’t have a problem with submitting a zero hours timesheet on the client’s system, but to be dictated to that my company needs to submit a zero value invoice is the step I think is too far.

[eek]

In my opinion that’s not good!
Being told to submit “non billable invoices” for a period means that the company is expecting you to raise paperwork for doing nothing when you’re not “working” for them.

Don’t submit invoices. You’re doing no work. If you want to make it look better, then get a client you can work for during that period. Even if it’s helping out at a local pub for a week - get them to pay you as a supplier and put it through the company books.

It's a non-billable invoice equivalent to a timesheet for a period of time.

And I've often had to submit zero hours into a timesheet system so that the missing data didn't break other badly written reports.

[WTFH]

I keep a copy of a mail that states that "contractors (good starting word :-)) are not required between xx Dec and xx Jan and are to submit non billable invoices for this period. Permanent staff can decide whether to work or not over this period depending on their remaining annual leave. "

In my opinion that’s not good!
Being told to submit “non billable invoices” for a period means that the company is expecting you to raise paperwork for doing nothing when you’re not “working” for them.

Don’t submit invoices. You’re doing no work. If you want to make it look better, then get a client you can work for during that period. Even if it’s helping out at a local pub for a week - get them to pay you as a supplier and put it through the company books.

[b0redom]

Is it enough on its own do you think?

The problem with my client is they want a silver bullet (other than ROS) and I'm struggling to get them to see they need to look at the whole picture.

I'm toying with using the RALC notes re MOO but not sure it's enough

Probably not - although you only have to demonstrate one on the 3 pillars of IR35 to show you're outside, I'd want as much evidence of real working practices as possible, and wouldn't rely on this solely as a silver bullet.

[Blert596]

IMO a furlough is at worst a strong indicator of being outside IR35. I don't think I've ever worked for a tech / corporate company who's said to their permie staff, "We're having an unpaid shutdown over Xmas. Don't come in."

I have had this a couple of times as a contractor though.

I keep a copy of a mail that states that "contractors (good starting word :-)) are not required between xx Dec and xx Jan and are to submit non billable invoices for this period. Permanent staff can decide whether to work or not over this period depending on their remaining annual leave. "

[DrStrange]

IMO a furlough is at worst a strong indicator of being outside IR35. "

Is it enough on its own do you think?

The problem with my client is they want a silver bullet (other than ROS) and I'm struggling to get them to see they need to look at the whole picture.

I'm toying with using the RALC notes re MOO but not sure it's enough

[b0redom]

IMO a furlough is at worst a strong indicator of being outside IR35. I don't think I've ever worked for a tech / corporate company who's said to their permie staff, "We're having an unpaid shutdown over Xmas. Don't come in."

I have had this a couple of times as a contractor though.

[DrStrange]

In the RALC notes it's stated:

"While the obligation to provide work beyond the date of the contract is irrelevant, the obligation to provide work within the dates of the contract is highly relevant"

I've read on here (from NLUK I think) that a furlough period isn't relevant for MOO but I don't understand why not?

Surely if within the contract dates the client doesn't provide work, then that falls into the above scenario?