inside IR35 payroll contract, but unlimited financial risk inside IR35 payroll contract, but unlimited financial risk
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  1. #1

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    Question inside IR35 payroll contract, but unlimited financial risk

    Hello,

    I'm wading through my first inside IR35 contract at the moment - which is a weird 3 way contract between a payroll company, the "employment business" (the recruiter), and me personally. I'm used to signing contracts as a limited company, I have insurance in case things go wrong, and if things go really wrong my exposure is limited because it's a limited company.

    In this IR35 payroll contract however, I am still being asked to personally take on considerable (in some cases unlimited) financial risk to indemnify the other parties*, even though I'm being taxed like an employee.

    Anyone else come across this? I suspect I could be the first person who has been asked to sign this particular contract. But I wonder how common it is - I don't think it's been thought through very well, and I can't see how I can sign it.

    Eric


    *A plausible scenario: I use an open source library during the course of my work, but subsequently an IP claim is made against that library by some large company, and my end client (another large company) gets sued as a result - I would be personally responsible for all of their costs defending the case.

  2. #2

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    northernladuk's Avatar
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    We've had this a quite often and you can previous posts on it here. These aren't for inside gigs though.

    indemnify site:contractoruk.com/forums - Google Search

    We have had one or two recently so you might have to do a bit of digging but they are around.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  3. #3

    bored now

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    Quote Originally Posted by erdo View Post
    Hello,

    I'm wading through my first inside IR35 contract at the moment - which is a weird 3 way contract between a payroll company, the "employment business" (the recruiter), and me personally. I'm used to signing contracts as a limited company, I have insurance in case things go wrong, and if things go really wrong my exposure is limited because it's a limited company.

    In this IR35 payroll contract however, I am still being asked to personally take on considerable (in some cases unlimited) financial risk to indemnify the other parties*, even though I'm being taxed like an employee.

    Anyone else come across this? I suspect I could be the first person who has been asked to sign this particular contract. But I wonder how common it is - I don't think it's been thought through very well, and I can't see how I can sign it.

    Eric


    *A plausible scenario: I use an open source library during the course of my work, but subsequently an IP claim is made against that library by some large company, and my end client (another large company) gets sued as a result - I would be personally responsible for all of their costs defending the case.
    Don't use open source software without sign off from others then - but thanks for reminding me of that issue...
    merely at clientco for the entertainment

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