Opt out - Agreement

[alienuk]

I am picking up a new contract with an agency who are functioning on behalf of another main agency.
In addition to the usual contract document, I am asked to sign an Opt Out Letter. This being new to me , I thought i will ask this in the forum for advice.

We are writing in relation to the proposed supply by the Consultant <my name> to
you, and the onward supply by you of the Consultant <my name> to a hirer. This is
a relationship to which the Conduct of Employment Agencies and Employment Businesses
Regulations 2003 (‘Regulations’) applies.
We are writing to notify you that we, as the company work-seeker and the individual being supplied,
have agreed in accordance with Regulation 32(9) to opt-out of the Regulations.

If you have come across this before, I would appreciate your thoughts and suggestions.
Thanks in advance.

Newbie

[malvolio]

You have two choices (other than researching what the Opt Out actually is,...)

Sign the letter as provided or ignore their form letter, and send them your own version saying you and YourCo do not want the regs (quote their title in full) to apply to the engagement. It will probably be invalid since you have to opt out before your introduction to the client. Logically it is too late for that, but the agency will argue that "introduction" means the day you start work. If it ever comes to dispute where your status is relevant - such as them not paying you until they get paid - it will need a court case to work out the actual position.

Don't sign it and look for another gig.

Agencies press for an opt out because it saves them a lot of additional effort: it has no effect on IR35, for instance. The only way to avoid the whole sorry mess is to opt out when you send in the initial application. And you can't opt in, you're in unless you correctly opt out.

As an aside, one of the big agencies checked their opt out process while back and found over 90% of them to be invalid.

[alienuk]

Many thanks for your help

You have two choices (other than researching what the Opt Out actually is,...)

Sign the letter as provided o

r ignore their form letter, and send them your own version saying you and YourCo do not want the regs (quote their title in full) to apply to the engagement.

. It will probably be invalid since you have to opt out before your introduction to the client. Logically it is too late for that, but the agency will argue that "introduction" means the day you start work. If it ever comes to dispute where your status is relevant - such as them not paying you until they get paid - it will need a court case to work out the actual position.

Don't sign it and look for another gig.

Agencies press for an opt out because it saves them a lot of additional effort: it has no effect on IR35, for instance. The only way to avoid the whole sorry mess is to opt out when you send in the initial application. And you can't opt in, you're in unless you correctly opt out.

As an aside, one of the big agencies checked their opt out process while back and found over 90% of them to be invalid.

[northernladuk]

Many thanks for your help

You can also read the huge stickie we already have going on this topic..

https://www.contractoruk.com/forums/...-2003-act.html

[man]

For what it's worth, I don't opt out (and have so far managed to avoid the few agencies who technically illegally* force an opt out) most just push it, some quite hard. Holding your ground and pointing out that your own legal advisor has advised you not to opt out, seems to work with most agents.

In my opinion, the protection offered against restricted covenants (8 weeks maximum enforceable duration if I remember correctly, but only if not opted out) and non payment (you must still be paid irrespective of whether they get paid by the end client or not - not that in my experience it stops late payments) is totally worth it for just a bit of extra upfront hassle with the agent.

* Technically illegal because there is no enforcement, the government does have an email address you can report it to, but my understanding is that they don't do a thing about it.

[northernladuk]

For what it's worth, I don't opt out (and have so far managed to avoid the few agencies who technically illegally* force an opt out) most just push it, some quite hard. Holding your ground and pointing out that your own legal advisor has advised you not to opt out, seems to work with most agents.

You really think an agent believes you have a legal advisor?

In my opinion, the protection offered against restricted covenants (8 weeks maximum enforceable duration if I remember correctly, but only if not opted out) and non payment (you must still be paid irrespective of whether they get paid by the end client or not - not that in my experience it stops late payments) is totally worth it for just a bit of extra upfront hassle with the agent.

* Technically illegal because there is no enforcement, the government does have an email address you can report it to, but my understanding is that they don't do a thing about it.

What makes you think it is illegal. Please link what law it breaks.

Not once in all the time of being on this forum have I seen the opt in situation make one iota of difference to a payment dispute. Makes absolutely no different to late payments as well so it is only exactly as you say an (unfounded) opinion.

And the 8 weeks handcuff. That's still 2 months so far too long to be practical. Again, I am yet to see where an opt in/out status has made one iota of difference. Negotiation has sorted it everytime.

Its such a useless bit of legislation it's hardly worth bothering about, even if the agent understands it, which they don't.

[BlasterBates]

The same people who will be advising you not to sign the contract that includes an opt out will be advising you are powerless when the client cancels you without any notice or the agency won't pay without a signed time sheet.

The opt-out is completely pointless for a contractor. Contractors were perfectly content before 2003.

No harm in asking not to opt out but is rather unimportant. If you want to be paid without a time sheet get it in your contract.

You don't have to be opted in to have the right to be paid for work carried out, a very standard contract has sufficient protection.

[northernladuk]

You don't have to be opted in to have the right to be paid for work carried out, a very standard contract has sufficient protection.

Indeed. Also in that contract it can often have a caveat that says you won't get paid if the client doesn't pay the agent.

Now I keep meaning to ask this but I imagine the OP thinks the Opt In gives him absolutely certainty he'll get paid but it doesn't. It says just without a time sheet. If I understand it right, if the client doesn't pay the agent, the agent is not obliged to pay the contractor regardless of being Opted in?

[man]

You really think an agent believes you have a legal advisor?

Have you ever wondered why I'm with B&C despite them costing maybe double what I can get IR35 cover for elsewhere? They actually provide a bit of legal advice for no additional charge. I'm sure at any point if I take the biscuit they may decide to refuse to provide additional advice but so far I've managed to get a fair amount of good quality of advice from them on a range of issues including contract termination and these very regulations we're discussing here. I couldn't give a monkeys what the typical agent thinks, I only care that I get the result I want and they stop trying to browbeat me into signing what their boss told them to push.

What makes you think it is illegal. Please link what law it breaks.

The Conduct of Employment Agencies and Employment Businesses Regulations 2003
PART II, Regulation 12:
The Conduct of Employment Agencies and Employment Businesses Regulations 2003
I'm not going to quote the entire section because otherwise this post will end up being the length of an essay, but if you click the link it's right there in black and white (at least the relevant bit of the law in relation to withholding payment). And just to reiterate, this is the actual wording of the law. I'm not legally trained but it seems clear to me.

Not once in all the time of being on this forum have I seen the opt in situation make one iota of difference to a payment dispute. Makes absolutely no different to late payments as well so it is only exactly as you say an (unfounded) opinion.

I think that's a fair point, well made - but that said I do like to be in a position where if things get disputed, I can tell the agent that they are breaking the law if they refuse to pay. It's got a bit more punch to it than a civil matter and may tip their hand. In other words, if they're deciding who to pay and not pay for cashflow reasons or whatever, do you think the guy opted out is perhaps more likely to not get paid? I do.

That and not getting a timesheet signed is a real possibility (for a load of reasons unrelated to performance, not just if you're rubbish), the conduct regs cover that off too.

Also in that contract it can often have a caveat that says you won't get paid if the client doesn't pay the agent.

Now I keep meaning to ask this but I imagine the OP thinks the Opt In gives him absolutely certainty he'll get paid but it doesn't. It says just without a time sheet. If I understand it right, if the client doesn't pay the agent, the agent is not obliged to pay the contractor regardless of being Opted in?

Again, not legally trained but my unqualified understanding is that legislation trumps contracts, every time. Totally agree with your points that nothing makes it certain you'll get paid, but the conduct regs mean that you are supposed to be paid irrespective of timesheet.

[malvolio]

Indeed. Also in that contract it can often have a caveat that says you won't get paid if the client doesn't pay the agent.

Now I keep meaning to ask this but I imagine the OP thinks the Opt In gives him absolutely certainty he'll get paid but it doesn't. It says just without a time sheet. If I understand it right, if the client doesn't pay the agent, the agent is not obliged to pay the contractor regardless of being Opted in?

Not quite. Remember what the AWR is actually there to do: among other things, ensure a company supplying workers pays its workers on time wherever possible, even if it has not itself been paid for the work done (in other words, don't pay divis or buy another yacht until your workers are covered). So if you have the money somewhere, pay your workers first. (Of course, Joe Agent and his dog with his phone and his previous employers contact list won't have those reserves under his bed, so will lep at the chance to avoid paying before he is paid)

Also, the opt out is highly necessary to protect those small businesses who use a few subbies on a regular basis: the provisions are commercially risky for micro-businesses.

It was never meant for agencies to divest themselves of commercial risks when dealing with individual contractors, nor to step around other protective clauses in reasonable contracts. Blame the DTI - there were asked and given reasons why, but were unable to understand why one man bands should be out of scope.