Substitution clause

[pdr]

Quick question. I have had a contract reviewed and it failed straight off the bat for not having a clear substitution clause. The contract mentions the ability to subcontract but says it was at the discretion of the company. I've spoken with the client and they have said it is not possible to substitute as a security check is being performed on me (I would have thought it would be on the business rather than individual).

My thoughts are that despite being on the bench for a while, I should just reject and continue with my job hunting pursuit. Agree?

[downsouth]

all sounds pretty normal to me, from a client perspective why should they let you put anyone you like on site without some form of screening

and tbh are you going to envoke the substitution clause?

[riffpie]

Quick question. I have had a contract reviewed and it failed straight off the bat for not having a clear substitution clause. The contract mentions the ability to subcontract but says it was at the discretion of the company. I've spoken with the client and they have said it is not possible to substitute as a security check is being performed on me (I would have thought it would be on the business rather than individual).

My thoughts are that despite being on the bench for a while, I should just reject and continue with my job hunting pursuit. Agree?

Couldn't the substitution clause stipulate that the substitute be cleared as well?

[pdr]

all sounds pretty normal to me, from a client perspective why should they let you put anyone you like on site without some form of screening

and tbh are you going to envoke the substitution clause?

I'm unlikely yo envoke a substitution clause however not having one probably wont do my any favours with an IR35 investigation.

Couldn't the substitution clause stipulate that the substitute be cleared as well?

I've requested that the sub contract clause be modified to a more unambiguous substitution term as suggested by QDOS however they have rejected the changes.

Thanks for your replies so far.

[northernladuk]

It has to go on working practices, not what the contract says. If you fudge the contract and an investigate asks your client who says never accept sub you will be scewed.

It is an interesting point about bringing in people that need screening though, wouldn't be impossible to find someone that is, hard but not impossible. Maybe they know how difficult it is so not practical.

Why do you think an SC check on a business enough? It is people that leak secrets, can be blackmailed etc. The SC is with the person.

You are going to have a think about the risk here. No Sub is a major point of IR35 so I think it is down to your attitude to risk. Do you risk it or do you claim inside. I have to say I don't know how big a flag it is but there are not many IR35 investigations at the moment and the SC check is a pretty sound reason not to be able to have one.

[pdr]

It has to go on working practices, not what the contract says. If you fudge the contract and an investigate asks your client who says never accept sub you will be scewed.

It is an interesting point about bringing in people that need screening though, wouldn't be impossible to find someone that is, hard but not impossible. Maybe they know how difficult it is so not practical.

I think thats why they have turned down my requests for contract amendment and out right said that they won't accept a substitute (despite having a sub contact clause).

Anyway I shall watch a few more re-runs over only fools and horses and see if that 'he who dares' is in me.

[Frome Golfer]

Quick question. I have had a contract reviewed and it failed straight off the bat for not having a clear substitution clause. The contract mentions the ability to subcontract but says it was at the discretion of the company. I've spoken with the client and they have said it is not possible to substitute as a security check is being performed on me (I would have thought it would be on the business rather than individual).

My thoughts are that despite being on the bench for a while, I should just reject and continue with my job hunting pursuit. Agree?

Not sure about the SC aspect but the contract itself should not necessarily fail just because it says that substitution is at the discretion of the company.

For example, I had one that failed in which the substitution clause stipulated that the client would need to interview the substitute. My current contract, which passed, has a much woolier wording but the implication is still that it's at the discretion of the client.
But, as the other chap said, if the rel working practices don't reflect what's written in the contract then this would come to light in any investigation.

Incidentally - how come there aren't many IR35 investigations at the moment? Is there some hiatus while the new framework, for want of a better word, is put in place?

[Wary]

My thoughts are that despite being on the bench for a while, I should just reject and continue with my job hunting pursuit. Agree?

As has been said, the key to any IR35 review is the reality of the working practice, not the contract. So having this clause may not actually make a lot of difference.

Better to have it in, but I wouldn't turn down work just because of it. Instead you could take the stance that statistically, it's not likely to be you that is investigated ... and as you say, he who dares, wins

[kingcook]

Instead you could take the stance that statistically, it's not likely to be you that is investigated ... and as you say, he who dares, wins

And he who dares and loses, loses his house in 5 years time having to pay back unpaid taxes + interest.

[Clare@InTouch]

If you think the contract will fail IR35 then perhaps review your salary. If this contract is for three months and will bring in a total income of £10,000 but your current salary is set at £12,000 then you're covered anyway as the IR35 deemed salary calculation would be covered by what you're already paying.

Not having a substitution clause shouldn't automatically fail a contract as there are two other main factors you could rely on - Control and MOO. It's not that unusual to not be able to substitute when you're working on maximum security type sites, and provided you can demonstrate you have control over what you do it could still pass.

This case for example shows that whilst substitution was a factor, there were other reasons the case was won (being control and MOO):

<removed>


Or check out Novasoft, where the case was won, and yet the contractor couldn't substitute:

The decision
As the judge’s decision explains, the Novasoft case was “borderline” but more of the factors worked in the appellant’s favour than HMRC’s. On the point of control, the judge determined that the notional contract (in which the contractor’s terms would be assessed as though he were providing the services to the client directly) would not have been prescriptive as to exact hours of attendance, or the exact manner in which Brajkovic carried out the tasks assigned to him.

While the contract was in place mutual obligations did exist, the contractor had no right or expectation to be offered any future contracts, the judge decided.

In paragraph 78 of his decision, the judge concluded: “We consider that the overall picture painted is one of a contract of self-employment.” While Brajkovic would not have been permitted to supply a substitute to perform the work, “in the particular situation of Novasoft and taking the picture as a whole that detail does not disturb the overall impression we have formed of the notional contract,” he added.

Inside story: The Novasoft IR35 appeal | AccountingWEB