Contractors' Questions: Are 'other duties' inside IR35?
Contractor's Question: I believe that I'm outside IR35 for my next gig. I've got a clear project with fairly clear deliverables. It is also a fairly IR35-friendly contract, and I do have a genuine Right of Substitution and there seems to be no Mutuality of Obligation.
However, the following clause in the contract under the Project section concerns me: "The supplier/consultant will be working on a Learning Management System Implementation Project as well as any other duties as may be required by the client".
I'm concerned about the implication of this "any other duties" clause, as it sounds problematical to IR35, in that I'd be inside the legislation. Should I ask the agency to remove "any other duties"? Or is it a fairly standard term in freelance contracts?
Expert's Answer: Before addressing the specific clause, it is worth considering the three key status indicators used to determine whether a contract is in fact for services (self employment) rather than of service (employment).
You mention that you have a right of substitution – I hope that this is only fettered (restricted) to the extent that the Client can only refuse your substitute if the substitute does not have the right qualifications, experience or skills (you could also add security clearance if applicable), and that it is your right to send a substitute; not the Client's right to accept.
In respect of Mutuality of Obligations, the contract should seek to deny this with a clause which not only states that the Agency/Client do not have to offer further work and you do not have to accept if offered (ongoing mutuality) , but it should also deny mutuality between assignments/periods where there is no work and during any notice period (mutuality within).
You have not mentioned the third key factor: control. A right of the Client/Agency to exercise control over you should not exist. Nothing in the contract should require the Supplier/Service Provider to be subject to the direction, supervision or control of the Client/Agency; nor should the contract only grant you "reasonable autonomy" over the method of performance of the services. If the contract does not determine that the Supplier/Service Provider alone is responsible for how the work is to be undertaken, then this would be a worry.
And it is in respect of the matters of 'control' and 'mutuality of obligations' in particular where you should be most concerned about wording such as: "as well as any other duties as may be required by the client".
Firstly, "as required by the client" suggests that the client has a right to supervise or control you and may be directing how the work is prioritised. Secondly, and possibly of greater concern, this undermines the project nature of the work because it creates an expectation that work may be offered outside of the project remit, which you are then obliged to undertake. Not only does this undermine the right to refuse work, but if this work is routine and typical of what might be required of an employee of the client, is there not a danger that you are being integrated into the client's organisation? If, for example, work is being offered to bridge the gap between projects because the Client doesn't want to lose your services, this demonstrates mutuality, as the client feels obligated to offer work to retain you and if you are as keen to accept (or indeed cannot refuse), then this completes the mutuality.
This type of clause does appear in some agency contracts, but in fairness and ultimately, these few words alone would not seal your fate. Nevertheless, for the reasons stated above, it would be better if this clause was to come out of the contract.
Of course, as with any clause which is removed (or added) to a contract, it must reflect the reality of the arrangements. If you are genuinely 'filling in' between projects, then perhaps the truth is that the clause should remain, although clearly it will undermine your status as an independent contractor.
The expert was Paul Mason, Contractor Division Manager at Abbey Tax Protection, a tax and compliance specialist.