Being supervised = inside?

**MrRobin** · 11 September 2007, 10:58

I don't see how a level of supervision constitutes instant IR35'ness... I'm no expert tho, but surely every gig, no matter how specialist and autonomous you are is going to have a level of supervision - "how's the work coming along?" / "don't do it like this, we want it like that" etc etc.

Why does the agent care whether you choose that the contract is inside or outside anyway... it's your decision to make as director!

**malvolio** · 11 September 2007, 11:03

Yes, agreed - supervision is not Direction and Control, and it is not an issue if your client wants to keep an eye on your output.

Your pimp needs re-educating though - he's clearly not qualified to comment on IR35 status. For another thing, it is not his decision whether or not you opt-out, only you can do that. Opt in and really upset him. Or point out that since you have met the client, you can't opt out anyway.

**Jog On** · 11 September 2007, 11:32

OK this is the MOO clause (I think):

"7.1.6. To co-operate with the Client’s staff and accept the direction of any person in the Client’s organisation to whom it is required to report and comply with all reasonable and lawful instructions within the scope of the Assignment made by the Client."

Apparently the agent's business terms are governed by The Recruitment & Employment Confederation and cannot be changed. There is no substitution clause and apparently extra clauses cannot be added due to REC guidelines.

However there is the definition at the beginning of the contract that says:

"“Contractor” means the Limited Company engaged by the Employment Business to provide the services of its employees, officers or representatives to the Client;"

The contractor's obligations part begins like this:

"7.1. The Contractor agrees on its own part and on behalf of its Staff as follows:"
There is also a clause that says:

"11.4. If the Staff are unable for any reason to work on an Assignment the Contractor should inform the Employment Business by no later than 10.00 am on the first day of absence to enable alternative arrangements to be made."

It is the 'legal expert' from REC who is advising the agent that lack of control makes a contract automatically inside. It is also the REC who prevent the addition of a substitution clause.

Do the above clauses imply substitution and if not can a substitution letter cover for the fact that it's not pointed out in the contract? The rest of it looks pretty friendly but I'd be much happier if substitution were in there.

I'm getting a PCG review as well but I'd appreciate any input anyone may have as well

**MrRobin** · 11 September 2007, 11:51

As I understand it, what you are looking to have in a contract is a clause that specifically says there is a lack of MOO - i.e. "The client is not obligated to provide work to the service provider, nor is the service provider obligated to accept any work offered". Your clause 7.1.6 to me just looks like it is saying if the client tells you they want a blue background in the ap you're developing, you give them a blue background, and that you will comply with their data policies etc etc...

As for substiution, again it's not a substitution clause as I know it... it will typically say something like "The service provider is permitted to provide alternative personel, provided that they are capable and it has been agreed with the client etc etc etc"

Hope that's what you were getting at...?

**malvolio** · 11 September 2007, 12:00

Immediately, I don't llike the word "Direction" in 7.1.6, that blows your IR35 defence out of the water. And they're talking rubbish about REC limiting their ability to change contracts. Typical big agency FUD, I'm afraid.

Might I suggest this looks like a job for Bauer and Cotterell?

**Jog On** · 11 September 2007, 12:03

I'm pretty happy with the control and MOO as they are in the contract - this is the MOO (I think):

"3.1. The Contractor acknowledges that the nature of temporary work means that there may be periods when no suitable work is available and agrees: that suitability of the work to be offered shall be determined solely by the Employment Business; that the Employment Business shall incur no liability to the Contractor should it fail to offer opportunities to work in the above category or in any other category; and that the Contractor shall not be obliged to accept an Assignment offered by the Employment Business."

As far as substitution goes my main concern is that there isn't a clause in the contract so my question is:

Do the parts I've quoted imply substitution and can I get round it with a substitution letter if - as the agent states - he cannot add a clause to the contract or change his business terms?

I don't think that being supervised automatically puts a contract inside as the legal expert seems to think, so my main concern now is the substitution.

**Bluebird** · 11 September 2007, 12:21

The substituion clause doesn't allow you to sub-contract, it seems to explicitly state that it's your co's employees - which is probably just you.

As Mal said I'd get B&C to llot at it although it looks a bit ropey to me.

Who's the agent ?

**VectraMan** · 11 September 2007, 12:55

Originally posted by malvolio View Post

Immediately, I don't llike the word "Direction" in 7.1.6, that blows your IR35 defence out of the water. ?

I had one just like that, and I objected to the word "direction" and got them to change it. I can't remember what to exactly, but something vague about meeting requirements.

it is required to report and comply with all reasonable and lawful instructions within the scope of the Assignment made by the Client

All sounds pretty bad to me.

**zathras** · 11 September 2007, 14:26

Originally posted by Jog On View Post

Just negotiating my contract for next gig and the agent mentioned that the contract would be ‘inside IR35 with opt out’.

I asked why it had to be inside and he told me that legally any situation where a contractor is supervised and not just coming in as a specialist with complete autonomy is automatically inside.

I’m aware of the ‘control’ aspect of IR35 but I thought that things like substitution and MOO were bigger factors. I sent him a draft PCG contract, asked for a ‘friendly’ contract and said that I’d take a friendly contract coupled with my PCG cover and sleep soundly at night.

It will be a support and XP/AD rollout role – I know we’ve dealt with support roles and IR35 before but this has got me a bit rattled. I’m reinvesting large amounts of gross income on things like business growth training and product development so I can’t have 95% of the income from this gig subject to PAYE/NIC+employer’s NIC..

I’m inclined to believe the PCG stance that control is only a smaller factor and does not automatically deem a contract as inside (or out) – is this right?

He is talking cr*p. Put it this way when you get a plumber in do you just let him in without telling him what to do.

And what is this 'with opt-out' gubbibs. Tell him No, if it is Ir35 caught it will be IR35 caught and opted in. Of course you will be happy to opt out - as soon as he gives you a contract outside of IR35!

(Note: No agency can make you opt out - that is in your gift, not his)

Being supervised = inside?