Substitution clauses

[Mustang]

In order to stay outside of IR35 I am trying to negotiate a substitution clause in my contract. The client is happy to have it in but they want to be able to veto any substitute my company offers. I am relatively comfortable with this but want to add a statement (as does my accountant) to the effect of "but not if the substitute is suitable qualified". This will ensure that there is no inference that the client has control over my company. I do have a clause saying the client has not control over my company already.

Following me so far?! :-)

Any one have any thoughts on this: should I add the extra clause or not? This is the last "sticking point" to signing the contract.

[iakobski]

If they can veto the sub on any ground, you may as well not have the clause at all. If the can veto based on experience, skills or qualifications then that's fine.

[Vetran]

have a look at the IR site - they have some examples. 'approval should not be not unreasonably witheld' is a good phrase to cover client decision. Key AIUI is to make sure approval for substitution is dependant on business reasons only.

[weemster]

I had the same situation. My accountant recommended that I added a substitution clause and I did....it was something along the lines of my company has the right to provide a suitable replacement.

Feelings on this subject will no doubt be mixed but I feel its best to do all you can from the outset.

[Mustang]

Great feedback so far - many thanks. I am begining to formulate some ideas regarding wording.

Where on the IR website shoudl I look for examples - even the section on IR35 is quite big.....

[Vetran]

Can't find it right now they keep changing the IR site

However the BBC are kind enough to supply and Agency / Client agreement:www.bbcresources.co.uk/pdf/pc1.pdf

The Agency can substitute the Contractor with one month’s prior notice and the prior written agreement of the Client which shall not be unreasonably withheld.Without limitation to the generality of the
foregoing it shall be reasonable for the Client to withhold approval if it is not satisfied that the proposed
replacement has at least the, equivalent technical, communicative and consultative skills in order to
fulfill the Agency’s contractual obligations with regard to the Assignment and/or to accept the
replacement would prejudice the Assignment. Any cost associated with such requested replacement,
including time spent assessing the replacement candidate and or dead time training them will be born
by the Agency.

Of course IANAL - it may be worth joing the PCG and retaining an expert - Lawspeed are supposed to be quite good and cheap. I used QDOS which were OK and reasonably priced (£300 not bad for saving ~ £20K of tax)

[JS]

Re: Substitution

My solicitor advised against a 'substitution clause'. Says it is a red-flagger to the IR.

You need this kind of clause:

The Services shall be supplied by yourco using its own employees, subcontractors, or suppliers who are engaged by the Supplier at its sole cost and discretion.

And another like this:

No payment shall be due for any services not supplied with reasonable skill and care. Any costs incurred in the provision of such services shall be the sole liability of yourco and will not be met in any portion by the Client or the Agency. The Client at its sole discretion may reject the services where the services are in its opinion not supplied with reasonable skill and care and in a workmanlike manner.


Give the same effect. They may also want a clause that requires you to give notice of persons requiring access to premises and systems to provide the services.