Substitution clause - IR35 friendly?

[mudskipper]

Hi guys

I've been pushing to get my contract (direct with ClientCo) sorted - I'd used an IR35 friendly template which seemed to cover all the stuff I've read about IR35. ClientCo have come back with a few changes - think most look OK, but wasn't sure about this one...

My wording:

The whole or part of this Contract for Services may be assigned or subcontracted to any third party at the sole discretion of the Company and the Client may not object.

Their wording:

The Company many not assign or subcontract the whole or part of this Contract for Services to any third party without the prior written consent of the Client such consent not to be unreasonable delayed or withheld.


Anyone got an opinion on whether their wording is still IR35 friendly in terms of a substitution clause?

Thanks for your help...

[Moscow Mule]

Anyone got an opinion on whether their wording is still IR35 friendly in terms of a substitution clause?

Thanks for your help...

I reckon qdos will have a pretty good idea.

For actual (non-flippant) help try searching for unfettered substitution and see what you think from the previous times this has been talked about (I seem to remember a similar question about 3 weeks ago).

[mudskipper]

Thanks - "unfettered substitution" was indeed what I needed to google.
It seems that requiring written permission is skating on thin ice. Guess I need to talk to them again...

[malvolio]

Ermm...

If you're direct to the client, how does IR35 apply? Surely you have a B2B contract between YourCo and theirs, hence no intermediaries...

Anyway, unfettered means they can refuse your offered substitute on technical competence grounds but nothing else: i.e. the sub must be at least as capable as you of doing the job. Getting that into a contract is tricky, but can be done. The usual formula is along the lines of “you may send a substitute subject to the approval of the client, such approval not to be unreasonably withheld” and "reasonable" in this context means ability and aptitude, nothing else.

[Moscow Mule]

Ermm...

If you're direct to the client, how does IR35 apply? Surely you have a B2B contract between YourCo and theirs, hence no intermediaries...

Errrm, your Ltd is the intermediary?

[mudskipper]

Now I'm confused...

Contract is between MyCo and ClientCo.

But contract still needs to be IR35 friendly doesn't it?

Have found the following suggested wording

“The Company may substitute the primary consultant with another representative of the Company provided that the Client is satisfied that the proposed substitute has the necessary skills, experience and training to fulfil the contract services”

which ClientCo have just emailed back to say they are happy wiith, so will hopefully get this sorted soon...

[Moscow Mule]

Now I'm confused...

Contract is between MyCo and ClientCo.

But contract still needs to be IR35 friendly doesn't it?

Yes, otherwise the PCG wouldn't bother having IR35 friendly b2b contracts....

[malvolio]

Yes it does, but it's a lot easier without all that pseudo-employment rubbish the agencies insist on having. You can define good MOO and D&C clauses and make them real, so RoS is less of an issue.

Good point about the PCG though; members get all the contract templates for free, including the direct one, and they are guaranteed IR35 friendly. For £120 a year, I'd consider joining just for that.

[Pondlife]

Yes it does, but it's a lot easier without all that pseudo-employment rubbish the agencies insist on having. You can define good MOO and D&C clauses and make them real, so RoS is less of an issue.

Good point about the PCG though; members get all the contract templates for free, including the direct one, and they are guaranteed IR35 friendly. For £120 a year, I'd consider joining just for that.

Good recovery.

[Fred Bloggs]

Errrm, your Ltd is the intermediary?

Correct.