- a legal FAQ from Roger Sinclair

Articles published in 'Freelance Informer'

– and (post Nov 01) first published here as ‘Virtual Freelance Informer’:

- written by Roger Sinclair

For later reports, see now our War Stories pages.

IR35 - Relative importance of (1) what actually happens, and (2) the contract terms – 6^th December 2001 - A recent case in relation to the National Minimum Wage legislation has resulted in (1) a defeat for the IR (some might say that is never a bad thing, I couldn’t possibly comment), and (2) clarification of the relative importance of (a) the real world situation, and (b) the contract terms.
Substitution – 30^th November 2001 - I'm an IT contractor working through my Limited Company, through an agency, providing services to an end-client. My contract with the agency has a clause allowing substitution with the client's approval. In other words the right of substitution is fettered, and as I understand it the Revenue will see this (rightly or wrongly) as not a right to substitute at all.

Freelance Informer - RIP

Sadly, 16^th November 2001 appears to have been the last issue of Freelance Informer as we knew it – the publishers (Reed Group) having decided to terminate publication.

The magazine had a substantial following among Contractors, and had its own particular style. FI had been going for many years before I stated to write for it in March 1996 (about 2 months after I first set up this website), following an introduction to its editor John Charlton by another journalist of mutual virtual acquaintance, John Kavanagh.

Over the period from then until November 2001 I enjoyed writing no less than 141 articles. In the process I have had the pleasure to ‘meet’ (generally virtually, though occasionally over a beer) a large number of Contractors, and I have continued to find that the personality that makes a Contractor is nearly always the type of person for whom I have a lot of respect.

FI, dependent wholly on advertising, appears to have now become a casualty to a combination of a downturn in the market, coupled with developments in online services (to an extent which I certainly had not envisaged back in March 1996) which had also doubtless hit advertising revenues.

I’d like to offer my appreciation to John Charlton and the rest of the editorial team of FI – all of whom I believe have now been made redundant – and to hope that each of them succeeds in finding new horizons. And, of course, to all those who have supported FI in the past, both by taking and reading it, and by advertising.

So far as the egos column is concerned, I intend to go on writing articles in the same format periodically and putting them up on this site, I don’t guarantee that they will be fortnightly, but we shall see. Meanwhile, please keep visiting!

Old chestnuts reheated – 16^th November 2001 - I guess it must be something to do with the time of year, because old chestnuts are resurfacing and discussion about them is becoming reheated. The particular one which has been dropping into discussion groups and out of my email is a result of suggestions that one might defeat IR35 by arguing that the agent Is the client for IR35 purposes; that the relationship between individual and agency clearly could not be employment even if it were contractual; and therefore, hey presto, IR35 clearly doesn’t apply to anyone working through an agency.
O’Murphy’s blues – 19^th October & 2^nd November 2001 - The hot topic of the moment is the decision of the Employment Appeal Tribunal (EAT) in the case of O’Murphy v Hewlett Packard. The case is interesting, because the original decision on March 2001 had been thought to offer some consolation to contractors caught by IR35, in that it may have given them employment rights against clients who were unwilling to cooperate in IR35-friendly arrangements. Such a result appeared consistent with some of the comments of the Judge in the PCG case in April. However, this apparent trend has now been reversed.
Bank Managers – 5^th October 2001 - ‘Approximately two thirds of the way into a 12 month agency contract, the client told all the contractors that we had until the end of the week to agree to a 10% cut in rates (to be effective 4 weeks later). Anyone not agreeing would be given notice of termination. Further, when each persons contract came up for renewal the standard working week would be reduced from 40 hours to 35, resulting in an overall drop in income of 22.5%. If we are ‘disguised employees’ within IR35, is there anything in employment law that might make this behaviour illegal? Alternatively, is this helpful for IR35?’
What does it mean when a contract is frustrated? What exactly is Force Majeure? – 21^st September 2001
Restricted? – or not? – 7^th September 2001 - ‘My agency contract is coming to an end. When I originally negotiated it, I got the agency to agree not to impose a restriction on me. I now want to go to the same client, but direct. The Client tells me however that there is a restriction in their own contract with the agency, and is nervous about taking me direct.’
Unpaid holiday – 24^th August 2001 - ‘I am in the middle of a 6 month contract. The Client has said that all Contractors are to take 3 weeks holiday – unpaid – during August-October. Are we obliged to do so?’
When 6 months becomes 5 weeks – 11^th August 2001 - ‘I had a choice of two 6-month contracts. Contract A (i) was further from home, and (ii) paid more than Contract B. I accepted B. I then discovered that the need for me with Client B would only last 5 weeks – and that the agency had been told this at the outset (I saw the Purchase Order) – the Client told me that when they saw the ‘6 months’ bit in their contract the agency simply replied ‘just give 2 week’s notice after the first 3 weeks’. Which is what they in fact did.
Maybe yes, maybe no… - 27^th July 2001 - Undoubtedly, the question I’m asked most often nowadays, both by Agents, and by Contractors, is some variant or other on ‘when will the new Agency Regulations be coming into force?’.
Substitution – 13^th July 2001 - There seems to me much misunderstanding about the importance and relevance of ‘rights of substitution’; in this article I’d like to try and clarify the position.
Not satisfactory Part 2 -29^th June 2001 - the Nuclear Option
Not Satisfactory - 15^th June 2001 - 'After 6 months on a 1-year contract, I was called away from my desk one morning, to be given a letter telling me my contract was terminated without notice, and I was immediately escorted from the building. I've not been paid for (or got timesheets for) my last 2 weeks work. The agency claim that the contract was terminated under a clause which says they can do so if the Client says it is not satisfied with my performance.'
PI Insurance - 1^st June 2001 - I'd better begin by saying that I'm NOT trying to sell insurance! But to my mind, PI (Professional Indemnity) insurance is a worthwhile investment for the Contractor, and I continue to be surprised by the relatively large number of Contractors who don't carry it. PI insurance will generally protect you, to a greater or lesser degree, against any liability you may have to third parties as a result of mistakes you make in the course of your business as a professional. Essentially, against failure to do what you have contracted to do, to the required standard.
The illogical synchronistic duality inherent in expectations of having and eating cake - 18^th May 2001 - I've just finished doing an opinion on the IR35 status of a contract; this particular Contractor has been in the same position for the last 4 years, extending every 3 months a contract first made before IR35 was a glint in the Chancellor's eye - indeed, made whilst the Chancellor was a mere shadow of the real thing, before the 1997 election. Contract terms had not been revised to even attempt IR35 friendliness.
New agency regulations - 4^th May 2001 - After n hours over the weekend of digesting the subtleties of the new Agency regulations, I am left with the major intellectual challenge of trying to figure out exactly which planet those who drafted this subordinate legislation originated from. Zod might have be one possibility - though I strongly suspect that the only reason they find themselves on Earth is - well, let's just say it's illustrated by the sense and commercial relevance of the regulations. Not.
Going (not quite)direct - 20^th April 2001 - 'I've been working for a Client through an agency. The Client in turn has me working as part of a team providing services to one of its own clients. My contract is coming to an end, and the Client's own client wants to engage me direct. Does the restriction in my contract with the Agency prevent me from doing this?'
Victory snatched form the jaws of defeat? - 2^nd April 2001 - The long-awaited end result of the PCG's Judicial Review challenge to the IR35 legislation is finally with us.
Better than the test match - 23^rd March 2001 - The question most regularly dropping into my inbox at present is 'what do you think of the PCG Judicial review'?
If it works, don't fix it! - 9^th March 2001 - It won't be long before Contractors will not be the only ones suffering from recent legislative changes. The draft of the proposed new agency regulations has recently been published, and these (if finalized in their present form) will cause significant change to the ways agencies can carry on business - and, I fear, major changes to the industry as a whole. 'No man is an island' applies.
Deadline loom! - 23^rd February 2001 - Gone are the days when at the end of the tax year, all the contractor had to do was the simple end of year 'P35' PAYE return, just dealing with salary actually paid - and (s)he could leave everything else until the company accounts for the year were concluded.
IR35 - Staying Outside! - 9th February 2001 - Once you have an IR35-friendly placement lined up, and have negotiated an IR35-friendly contract to go with it, there are still points the wise Contractor will want to watch out for, in order to remain sure of not prejudicing his/her IR35 status. The ultimate answer to the question as to whether or not a contract falls outside the scope of IR35 is to be found in the real world situation, of which the written contract itself can only be a part.
Protect my Data! - 26^th January 2001 - 'I recently had an email from an agency (with whom I've never registered) telling me they had my details, and would send my details to clients where they thought I might be interested - unless I tell them otherwise. I don't actually want to use this agency, since they are a member of an organisation which has declared itself in support of IR35.'
Termination before start date - the other side of the borderline - 12^th January 2001 - 'I was offered a contract by an agency. They sent me an email to confirm details. I said I wanted something more than that, before I would give notice to terminate my current contract. They told me that this particular Client took a long time to get its Purchase Orders sorted out, and that it would be a while before I would see the contract itself. The best they could do was to get a fax sent to me by the Consultancy through whom I would be working. That fax came; as a result I gave notice - but the contract never arrived, and I was eventually told that the client had changed its plans - an no longer wanted me.'
Mitigation - and Widgets…8^th December 2000 - 'My contract was terminated prematurely by the agency in breach of contract - they should have given me 4 weeks notice. I found another contract within 2 weeks at a slightly higher rate - and now the agency says my claim against them has to be reduced by the income from the other contract. Why do I have to do this, since the broken contract itself was not exclusive?'
Unbalanced termination before start date - 24^th November 2000 - 'I was offered a contract by an agency, to start work overseas in 6 weeks time. They said they needed me to sign something straightaway, and faxed me a one-page form, which I signed and faxed back. The form said a written contract would be sent out later that day. In fact that didn't arrive until 5 weeks later, and when it did, it was unsigned, showed a revised start date 2 weeks later, and contained many other terms which hadn’t previously been discussed between us. I did not sign this. The day after the original planned start date I called the agency to try and make some arrangements to meet the client's staff, since I had by now moved overseas to where I was to be working. The agent then told me the client had a problem and the contract was cancelled.'
IR35 opinions - worthwhile?? - 10^th November 2000 - 'I applied to the Revenue for an opinion on the IR35 status on my contract. They told me I was inside IR35. I disagreed with their reasons and told them so. Now they say they have spoken with the client - but won't let me see the answers they claim the client has given them because (1) they claim they are classified (the client is a government body) and (2) they contain details of the arrangements between the agency and the client. The agency on the other hand refuses to release their contract with the client to me (even with numbers deleted) because they say the client won't let them - again, national security.'
Dutch restrictions – 27^th October 2000 - ‘I’ve worked for 3 years for a Client through an agency. Initially, the contract was through my own company, in the UK . Then it was through the Agency’s Dutch subsidiary as an employee – my company was not involved. That contract has ended and the Client now wants me to come back to the UK – but without the agency. I’m concerned about restrictions in the contracts.’
Hoist by its own petard – 13^th October 2000 - ‘After 3 months working on a 6 month contract, the Project Manager said the project was being put on ice as a result of lack of budget. The agency wrote the next day simply saying that the contract was terminated straightaway. I sent an invoice for the 4 week notice period, which the agency refuses to pay – and now the agency claims they terminated the contract under a provision giving them the right to do so without notice if the Client proves to their satisfaction that my services are unsatisfactory, and because I haven’t produced signed timesheets for the notice period.’
Conditional contracts – 29^th September 2000 - ‘I signed a contract with an agency for a 6 month assignment. The contact could be terminated by either party on one month’s notice. When I turned up on the first day, it was clear that the Client wasn’t expecting me, and hadn’t signed a contract with the agency. After discussion, the Client says it will find something for me to do for 2 weeks. The agency says that’s the best they can do.’
Don’t forget the basics! – 15^th September 2000 - I've noticed a tendency on the part of some contractors in recent times when considering the terms of a new contract to focus solely on IR35 related factors, but to be far less concerned about the basic commercial aspects of the relationship. This in my view is potentially dangerous.
IR35 – Control vs Substitution – 18^th August 2000 - Disregarding the various schemes which may be set up with the object of avoiding or mitigating the consequences of IR35 (and which may or may not stand up in court!), the prime way used by the majority of contractors to retain control of their own affairs and remain outside IR35 is to ensure that the assignments they accept are capable of falling outside its scope – and that they are expressed in the contract in a way that reflects that. There are two basic approaches:
Damages, mitigation, and notice – 4^th August 2000 - ‘After an apparently successful interview I signed up with an agency for a contract. Two days before it was due to start, the agency told me they had been told by the client that the project was cancelled. First they said they’d pay me in lieu of notice…then they said they wouldn’t…and now they say the client wants me to work for the next three weeks doing something else for them.’
Divide & Conquer! – 21^st July 2000 - ‘I’ve been getting the run around from an agency and a client; the agency arranged an interview in Germany and said the client would pay. I arranged the flights myself; at the interview the client said to send the bill for expenses to the agency. That was 13 weeks ago, and still neither has paid – each tells me to stop pestering them, and claims it’s down to the other.’
You will extend! – 7^th July 2000 - ‘I’m 6 weeks away from the end of my contract. I’ve had a letter from the agent, saying that the Client wants to extend for another 6 months, and that if I continue to work then I will be bound by the extension. I haven’t yet made my mind up about whether or not to extend, and am concerned about the IR35.’
Direct support – 23^rd June 2000 - ‘I’ve been working on a contract for a client through an agency, developing and supporting a software product. My contract is coming to an end, as the client intends to discontinue the product and cease supporting it. I have a good relationship with several of the client’s customers who are using the product, and they are upset that the client intends to cease support. I’m thinking about offering ongoing support directly.’
Gang of Three – 9^th June 2000 - ‘To try and avoid the consequences of IR35, two of my colleagues and I have put a proposal to our Client. Until now, the three of us have been providing DBA functions and support to the Client, under the Client’s management. The idea is that we will form a new company in which we will all be shareholders & directors, and that new company will enter a fixed price contract to give the client the same overall service, but managed by us.’
When negotiations fail – 26^th May 2000 - ‘I’ve been offered a contract through an agency. The client wants me, the rate’s OK, but the agency insists on dealing on its standard terms, and having read them it seems that those terms themselves will bring the contract within IR35. Can I go through another agency?’ The agency say I can’t because they introduced me, and that they won’t change their standard terms because (1) they’ve paid £20,000 to have them drawn up, and (2) they can’t be ‘seen to participate in helping someone to avoid tax’.
To apply, or not to apply? – that is the question - 12^th May 2000 - A problem perplexing many contractors at the moment is should they, or should they not, apply to the Revenue for an opinion on the IR35 status of their contract? And what if, having formed a view that their contract terms place the income from it outside IR35, they then ask for such an opinion, and get back an answer which is not what they expect?
Over before it’s begun – 28^th April 2000 - ‘I was recently offered a contract by an agency. We agreed a start date; they sent me 2 copies of the contract already signed by them; I gave notice to terminate my former contract; then the agency called and told me that the Client’s funding had been changed and that the new contract would not proceed.’
IR35 – 14^th April 2000 - ‘I’m about to sign up through an agency for a Client’s project lasting 3 months. How can I avoid the consequences of IR35?’
Persistence Pays! – 31^st March 2000 - ‘I worked for nearly a year under a contract with an agency. Then out of the blue one day the Client’s representative I reported to told me that the MD was not happy with the way things were going, and that I was no longer required. I was surprised, and sought an immediate interview with the MD. He told me that they were perfectly happy, but that they had always planned to replace me with a permie, and that they had now found someone suitable. I got nothing in writing from the agency; they simply told me that their contract with the Client allowed the Client to remove me at will.’
Shot in the foot - 17^th March 2000 - 'I was told by the Client that my contract was to end 3 weeks early - but despite my requests for clarification from the agency, I heard nothing from them until today - and now they are saying that since I knew from the client that the contract was due to end early, they have no further liability.'
Sneaky - 3^rd March 2000 - 'I've just received a letter from the agency, saying my contract has been terminated with immediate effect - they ask me to sign and return the letter - should I do so?'
Vote with your feet - 18^th February 2000 - 'I've worked as a Contractor for some years; I have skills which are in demand in a particular field (it costs me a fortune in training to keep them up to date!); I have a 'home-office' and an extensive reference library. A potential client wants to engage my skills for a particular project, but the agency insists on terms which would bring the contract within IR35, saying that if I work through an agency then I'll be subject to IR35, period - and he refuses to discuss it further.'
Another agency shoots itself in the foot… - 5^th February 2000 - Hot on the heels of that is another situation, where two clients of mine had worked alongside each other through another agency, for a Consultancy. One heard about the position from a colleague, and he himself told the second about it. The Consultancy insisted on them using this agency - the agency did not introduce either of them. The Consultancy deployed them onsite with one of its own clients. The Consultancy lost that contract, and my clients' contracts ended early - although the agency never bothered to tell them, or to give notice. The agency failed to find them fresh contracts, and when the consultancy's client made them offers, they accepted - with the full knowledge of the Consultancy's on-site representative. Some months down the line, the agency sued them, claiming that by accepting contracts with the Consultancy's client, they had broken the terms of their contracts with the agency.
Greed - 21^st January 2000 - 'We are prepared to pay the remaining sums due…'
Grown-ups 'R' Us - 7^th January 2000 - 'I relocated to take a contract for a year, and 10 months down the line I was asked to extend, although some contractors were then being cut from the project. I did so for 9 months at a slightly increased rate, but shortly after the extension started I was told by the client that I myself would be finishing 6 weeks later, because of budget cuts. I finished after that 6 weeks, having heard nothing from the agent. Because I'd relocated I've found it very difficult to get another contract.'
IR35 - counting the cost; awareness of agencies - 10^th December 1999
IR35 - update - 26^th November 1999 - The ongoing saga of IR35 continues to dominate my mail; so let's just review where the issue stands at present.
Terminated with prejudice - 12^th November 1999 - ‘After the first 4 weeks of a 6-month contract I was told by the project manager that as a result of a difference of opinion within the project team, my contract was to be terminated. The agency subsequently sent me a letter listing half a dozen reasons, all of which are wholly untrue.’
IR35 - again - 29^th October 1999 - ALL CONTRACTORS SHOULD READ THIS! a look at the tests likely to be applied to decide whether or not a contract will be caught by IR35
IR35 - what happens now? - 15^th October 1999 - Probably the question I've most frequently been asked recently is a variant on 'IR35 - what's going to happen?'. The picture is now becoming clearer.
3 months, or 6? - 1^st October 1999 - ‘After signing a contract with an agency for 6 months, I now find out (from the client!) that the agency’s contract with the client is for no more than 3 months – and the Client says they’re not renewing their own contract with the agency, when it ends next week. The agent hasn’t even bothered to contact me to tell me what’s happening’.
Dutch problems – 17^th September 1999 - ‘I started a contract 9 weeks ago to work in the Netherlands. The agency told me I had to work through a particular management company, because of the tax laws in Holland. Apart from a couple of small advances, I still haven’t been paid!’
Offshore companies - 3^rd September 1999 - 'I recently started a contract through an agency. The contract was between my own company and the agency. I've been working for several weeks now, but not one invoice has yet been paid. When I spoke to the agency about it, they told me that they've been told by the Inland Revenue that they can't make payments to my own company, because it was incorporated in the Isle of Man - and that, as a result, I'll have to get an English company instead before they can pay me!'
Notice? What notice? - 20^th August 1999 - 'I was signed up by an agency for a contract working through a consultancy which was providing support for an end client. The consultancy has told me my contract is ending early, because their own contract with the client is ending. The agency hasn't yet given me notice.'
Lies - 6^th August 1999 - 'I was offered and signed up for a contract. A couple of days before it was due to start I called the agency to check the address - and was told that there was a chance the contract would not happen…then that it was unlikely to happen…then that it was definitely off. Luckily I was able to secure an extension of my previous contract, but the rate was less.'
Working Abroad - 23^rd July 1999 - ‘I took a contract through an agency to work abroad for 12 months. The role I have been deployed in is far less demanding that which I thought I had accepted; I’m being required to work at a different and less convenient address than I had been told at interview; and I’ve now been asked to work shifts.’
History - 11th July 1999 - 'I had a contract through an agency for a client; a month before it was due to end, the client said it had run out of work for me to do. The agency told me to wait while they tried to find me another contract, and assured me that I would still be paid. I did nothing for a month, and the agency paid me in lieu of notice. Then I started another contract for the same agency with another client. The agency has withheld payment of the second month's invoice under that contract, claiming they have had a problem in getting payment out of the client under the first contract for the period in lieu of notice.'
Conned - 25th June 1999 - 'I knew I was the lowest paid contractor on the project. The agent had claimed they took a percentage fixed by the client, and that there was no room for reducing their margin. But I've now found out that their margin is 18%, whereas for the other contractors their margin is between 12 & 15% - so it seems clear he lied to me.'
Times of Change - 11th June 1999 - Update on IR35
'Not my job mate!' - 14th May 1999 - 'I accepted a direct contract as a developer. I've worked there for 8 weeks and so far have not written a single line of code - Instead, I've been allocated responsibility for the project documentation. It's running late, the client has penalty clauses with its own customer, and it's incredibly boring! I've complained in writing about this, but they won't change things.'
Getting paid (not) - 30th April 1999 - ‘I’m coming to the end of a 6 month contract with a small local agency. All has gone OK, although the agency has become slow in paying me. I invoice weekly. At the beginning I was paid after 10 days, but now it’s more like 2 months – I have 9 invoices outstanding. When I chase the agent he says his cheque is in the post – but it doesn’t arrive. There’s nothing in the contract saying when invoices have to be paid.’
Hassle you don't need - 16th April 1999 - 'I'm just coming to the end of my contract. The Client wants to extend me, but says my present agency's too expensive and wants me to change agencies. There's a restriction in my contract, but the Client says if I set up a new company that will be OK. Is this safe?'
IR35 - 31st March 1999 - Buried at the end of the long batch of press releases issued by the Treasury, Customs & Excise, and Inland Revenue immediately after the budget was a little gem entitled 'IR35 - Countering Avoidance in the Provision of Personal Services'.
Late payment - 19 March 1999 - 'I've been working under a contract since December. Each of my invoices so far has been paid late. I've complained, but it hasn't made any difference.'
Direct after 6 months - 5^th March 1999 - 'I went for an interview for a contract through an agency just over 6 months ago. I was offered the position, but declined in favour of something else. After that other position came to an end I contacted the original client, who said he could possibly use me. The next I heard was a call from the original agency. Do I have to go through them?'
No Parking! - 19^th February 1999 - 'I was interviewed for and offered a contract by an Agency. The essential terms - rate, hours, dates, client, and work location - were all agreed orally. I knew the location was in a bad area, and asked for an on-site parking space. I was told this would be provided, and so I said I would accept the offer. The contract arrived two days before I was due to start. There was no mention of the parking space, so I added this, signed and returned the contract, and started work. On arrival the Client told me that there were no car parking spaces available, and the agency told me the term I'd added was unacceptable. The position still had not been resolved by the end of the week, when the Agency said they were terminating the contract and not paying anything in lieu of notice - they say that since the document wasn't signed, there was no contract. They say they'll pay me for the hours I worked - but only if I acknowledge that it's in 'full and final settlement'.'
Misrepresentation - 5^th February 1999 - 'I had been offered an extension to my existing contract in London, but instead accepted an offer of a new position abroad from another agency at a better rate. I signed up for the new one and declined the extension. 4 weeks later - 2 weeks before the new contract was due to start - the agent called and told me he was having some difficulties in getting the 'top man' at the client site to sign up, but assured me this was 'just a formality' and not to worry. 2 days before the contract was due to start, he called again and said the contract was terminated - before it had even started! By this time I had no chance of resurrecting the offered extension on my old contract.'
Do you want me - or not? - 22^nd January 1999 - 'I've been working under a contract due to run until April. I heard from the client last week that I'd only be required for another 2 weeks. I've heard nothing from the agency - they don't seem to be able to talk to the Client. And I've a holiday booked during what would be the period of notice, which I would not have booked if I had known the contract was going to end early.'
Non-renewal - 8^th January 1999 - 'I worked for a client for 12 months, under a 3 month contract which was renewed several times. 1 week before the next renewal was due a new manager took over and told me they didn’t need me any more. I asked about notice, and he told me to work the remaining week of my contract and that I’d be paid in lieu of notice for the remaining 3 weeks. When my last day came he told me they'd checked the contract and been told they didn't have to pay notice.'
Christmas is coming, the Contractor's getting thin - 11^th December 1998 - 'I've been working for the same client for 3 years; my current contract runs to the end of January. I've just heard that the Client expects all its Contractors to take 2 weeks off over Christmas. When I thanked the Client for giving two weeks paid leave, the answer was 'Oh no, you won't get paid for it'. What is my position?'
It's all quite logical, really - 27^th November 1998 - 'I was interviewed for a 3-month contract; the agency called and offered me the position, and I said 'yes'. The rate had been discussed but the start date and hours had not. The agency said they'd send me the contract. When it still had not arrived 2 days later I called the agency and said I was accepting another contract through another agency. The first agency claims I am in breach of contract, and has sent me an invoice for what they say is their lost profit.'
The false security of 1 month's notice - 13^th November 1998 - 'I recently signed a contract with an agency to work in Germany for a year. I took the contract and accepted the rate because I fancied being there next summer. Now I find the agency's contract with the Client is for 6 months only.'
The Doctor's Note - 30^th October 1998 - 'I signed a contract with an agency, to start work last Monday. I was ill and unable to start last week. I thought I might have been able to start today, but my doctor has told me to stay off work for at least another 2 weeks. The agency claims this is a breach of contract on my part, and is putting them in breach of their own contract with the Client.'
Stuck away from home - 16^th October 1998 - 'I accepted a 6-month contract to work in Germany for a year. I was to take over from someone else who was about to leave - but in the event, didn't. I was then sidelined off into other work less challenging and outside my field of expertise, and without being given the support I needed to tackle the job properly. When I complained, I was told to look for another position. I committed myself to rent a local apartment for a year, and can't see any reasonable prospect of finding another contract locally.'
Beware the Rogue agent - 2^nd October 1998 - 'I started contracting in March this year. I had a choice between two contracts. The first offer was at £30ph. The agent for the second offered me £34, with £51 for overtime, and I said I'd accept. When the contract arrived to sign however, it showed a flat £30ph. I called the agent, who said this would only be for 1 month as the chap I'd be replacing would leave then and my rate would go up. I signed for 3 months. After the first month I was still being paid at a flat rate of £30ph, and every time I complained he blamed someone else and promised me it would be dealt with. When the renewal came up this was at last for £34ph and £51 for overtime. I kept calling the agent about the shortfall of about £2,500 for months 2 & 3; he asked me to send in bank statements so it could be checked with their payments, which I did. The next time I called I was told the individual I'd been dealing with had left.'
Working Time Regulations - 18^th September 1998 - 'I work as a contractor. I do not have my own company, and the agency deducts tax under PAYE. They've terminated my 12-month contract early, and offered me a fresh contract for the same position, but with an 8% reduction in rate. They say this is because of the new Working Time Regulations.'
Short contract - even shorter! 4^th September 1998 - 'I agreed to take a contract, away from home, at short notice. After the first week I was told by the agency that the Client had terminated the contract. The Agency say the Client won't sign the timesheets, but I know this is untrue. They haven't paid me. The agency had mistakenly sent the contract to the wrong address, and I only got it after the contract had been terminated.'
Nothing signed - but is there a contract? 21^st August 1998 - 'I was interviewed by a client for a position. The agency told me I'd got it, and sent me a contract. I spoke to the agency and they said the start had been delayed for a day, to which I said OK. But when I turned up to start, the client said there'd been some confusion. They interviewed me again, and then told me they didn't want me.'
Restrictions - 7^th August 1998 - 'I had been an employee of A for several years, when A decided to close my department and outsource its functions. B when tendering for the outsourcing had to guarantee to provide a percentage from a list of named personnel before they were awarded the contract. I was one of those names, and worked through B as a contractor. One year on, A has now given the outsourcing contract to C, which wants to use me as a contractor, still working for A. B is threatening to sue me for breach of a restriction, saying I can only work for A through them.'
'Just say 'no'! - 24^th July 1998 - 'I signed a contract to start next week. Now the agent says the Client failed their credit checks, and wants me to sign a fresh document and go direct instead; he says not to worry about this, he'll invoice the Client separately for his fee! But I don't feel quite so relaxed about it.'
Interest & Handling Charges - 11^th July 1998 - 'I'm having difficulties getting paid on time. I understand I'm not entitled to charge interest, so I agreed a term at my last renewal that if a payment was late I would be entitled to a handling charge of £100. After paying the first couple of these the agency now says this amounts to 'interest' and that I'm not entitled to it. I'm considering giving notice to terminate, so that the client doesn't suffer.'
Terminated with prejudice - 26^th June 1998 - 'My contract was terminated without notice after the first month, when the Client found one of its permanent employees was available and wanted to put him on the project instead of me.'
Competing Agencies - 12^th June 1998 - 'I was offered a position with a Client through an agency, but could not agree the rate. Meanwhile I was offered the same position through another agency at an acceptable rate - until the Client said it could not deal through the second agency because I had been introduced by the first. I declined the offer by the first - and lost the opportunity. Was the Client right?'
Make sure the contract says what you mean - 29^th May 1998 - 'I agreed to extend a contract out of goodwill for the client, on the understanding between me and the agent that I would be able to terminate on 4 weeks notice. I've given 4 weeks notice and the agency claims I'm not entitled to do so. The chap I dealt with at the agency has since left. Am I entitled to terminate?'
Not on the preferred supplier's list - 1^st May 1998 - 'An agency signed me up for a 6 month contract. The next day they rang and said they couldn't get the Client to sign. I now find the agency is not on the Client's preferred supplier list, and that the Client would gladly take me through another agency.'
Problems getting paid - 17^th April 1998 - 'I was working on a contract where I had been introduced to the Client by the agency, and then contracted direct with the Client - the agency invoiced the Client separately for its fee. The contract was extended - then the Client gave me 1 month's notice, and 2 weeks later told me to leave, making accusations about the quality of my work, and saying that it wasn't going to pay me for any of the notice period.'
Marched off the site - 3^rd April 1998 - 'After 2 weeks working on a contract I was told by another Contractor that I did not know my job, and marched off site. I've had nothing in writing from the agent, but he's told me on the phone that the client won't pay for a notice period.'
I don't want to go… - 20^th March 1998 - 'I and the rest of my team were laid off four months into a 6 month contract. After 2 weeks 'resting' (for which I was paid) the agent sent me for interview at another site for the same client. I found that the work did not interest me, and said I did not want it. The agent claimed this was gross misconduct and said that he was terminating my contract.'
What's a review worth? - 6^th March 1998 - "I was offered a 12 month contract. I wanted 6 but the agency said the Client wanted 12 and that they would 'get them to agree to a rate review after 6 months'. When after the first 6 months I reminded them of this, they said 'no, but we'll be in a strong position on renewal….'"
Notice cut short - 20^th February 1998 - 'I gave the client one month's notice to terminate my contract. A few days later the client asked where I was going next, and when I told them they told me to leave immediately. The client now refuses to pay for the last week of the month's notice period, claiming that I had intended to leave after 3 weeks. I had simply told the agency (the same agency for both old and new contracts) that I might be able to start the new contract after 3 weeks, but only if both Clients and I all agreed.'
Is there a contract (2) ? - 5 February 1998 - 'I was uncertain about my position when I heard that the Client I was contracting for was about to be taken over. On my request my agent approached the company most likely to take over. I asked at interview about a take-over; the interviewer said that there would be nothing to stop me joining them. I asked if there was a non-poaching agreement between the two clients, and was told 'no problem'. The agency called me and said the client wanted to offer me a year's contract at the same rate. I said 'yes' and he said the contract would be in the post that night. The next day I gave the old Client notice. Some days later the agency called and said the new Client was no longer offering me a contract, because of a non-poaching agreement they had with the old Client! The contract never arrived, and was two weeks before I could find another (less interesting) contract, at the same rate.'
Is there a contract? - 23 January 1998 - 'I was offered a contract recently by an agency, at short notice - they wanted me to start the next day. It became clear to me the first day that the contract wasn't for me. I've told the agency I don't want the position, but they're trying to bully me into continuing with it, and threatening to blacklist me, claiming I'd never work in contracting again. I haven't signed anything - they haven't even sent me a written contract!'
Terminating an unsigned extension - 9 January 1998 - ‘My last contract did not allow me to terminate early. About 6 weeks before it expired my agent sent me a renewal schedule. I told him I’d only sign if I had the right to give notice. He said he’d send me a fresh schedule to sign, but didn’t, and I didn’t sign or return the form he sent me. The old contract expired 4 weeks ago. I’ve now decided to leave and given 1 month’s notice, but the agent claims that by continuing to work, I’ve accepted the terms of the schedule they sent me, and that I therefore have no right to terminate – so he’s asking me to withdraw my notice.’
Contractor's right to terminate…not! - 12 December 1997 - ‘My contract says the Agent or the Client can terminate, but I can’t. The contract schedule says ‘Termination Notice: 1 month’ – does this give me the right to terminate? Is this legal?’
Who's going to pay for the agent's increased margin? - 28 November 1998 - ‘The Client I’ve been working for wants to extend my contract. The agency says that because they’re no longer on the Client’s ‘preferred supplier’ list, they want to increase their margin. The Client won’t pay more, so I’d get less – and the agency refuses to extend, unless the Client accepts the principle of this for all its contractors. The agency says a restriction in my contract with them prevents me from working for the Client, other than through them.’
Egos Rules - OK? - article for Freelance Informer yearbook 1998 - Contractors often ask me whether or not all the cases I write about are actually real-world situations; the answer is yes, they are. Every single one of them is an account of a Contractor’s problem recently encountered. I rarely have a problem finding something to write an article about – in fact, I’m generally spoilt for choice! But by following four simple rules, such problems can often avoided. At worst, the problems either won’t take the Contractor by surprise, or at least their effects can be reduced. I call these the ‘Egos Rules’.
Just how long is ’15 days’? – 14 November 1997 - ‘Last week, my contract was terminated when the Client cancelled the project. The notice period in my contract with the agency was 3 weeks; in the contract between agency and Client it was 15 days. The Client claims this means ‘calendar days’, and will only pay the agency for the 11 working days within that period. The agency says I should invoice them for those 11 days, and that they’ll ‘keep me informed’ about their dispute with the Client over the other 4. Should I just do as they say? Or should I invoice as they request, and (when it’s paid) take action for the other 4 days? Or just invoice for the unpaid work, wait till that’s paid, and then invoice for my whole 15 working days notice period?’
Misrepresentation - 31 October 1997 - 'I was persuaded to take an otherwise boring contract by the prospect of using some advanced analytical tools in the course of the work. The Client told me about these at interview, and the agent said they would look good on my CV, But when I started, I discovered that the day after my interview, the Client had decided not to use the tools at all!'
Personal problems - 17 October 1997 - 'I was working under a contract, when I had some personal problems, which resulted in my frequently being late for work. After being warned about this I was late a couple more times. Then I got my problems sorted out, but when I turned up for work on time the following Monday, I was met with a letter saying the client no longer required my services, and the agent was therefore terminating my contract without notice. The agent still owes me some £4,500, but has written saying they've lost £3,400, and that I'm liable for that.'
5 months - or 6? - 3 October 1997 - 'My current contract has a 'Commencement Date' and 'Termination Date' defined, with the Termination Date 5 months after the Commencement Date - but a 'Duration' of 6 months is also defined. The agent's own contract with the Client ended on the Termination Date, and 2 weeks before that date the agent rang me and said he was giving me notice to terminate; now I've been told that if I want to be paid for the last two weeks, I'll have to go into the agent's office in London and do their filing!'
Going Direct? - 18 September 1997 - 'An agency recently sent me for interview by a Client. The Project Manager said his budget was tight, and suggested that we do a deal direct, cutting out the agency. I don't feel right about the idea...'
Last Minute Cancellation - 4 September 1997 - 'I signed a contract. Two days before it was due to start, the agency called me and said they hadn't succeeded in getting the Client signed up, and I couldn't start. After signing the contract, I cancelled other interviews and turned down other work. Do I have any rights against the agency?'
Option to renew...and renew...and renew... - 22 August 1997 - 'I've been working on a contract, which has almost finished. The agent has contacted me and said that the Client wants to renew, and that I have no choice. Do I?'
No man is an island... - 6 August 1997 - 'After some difficulties in getting my agency to pay promptly (there are 3 months invoices outstanding), I finally got a cheque, which bounced yesterday! Today, the agency says their bank has closed them down.'
Timesheets - 25 July 1997 - 'I worked on a contract which was extended. I gave 4 weeks notice as required by the contract. The Client won't sign my timesheets for the last 2 weeks I worked, and the agent won't pay me. I know there were no problems with the quality of my work'
Lies... - 11 July 1997 - 'Before I signed a contract with an agency, they told me their margin was 15%. I said I wouldn't take a contract for less than 9 months. They've now terminated the contract without notice, saying their contract with their client has ended, and I've found out that their margin had been 30%! It seems they only had a three month contract with the Client in the first place!'
For the First-Time Contractor - 30 June 1997 - for the FI 'First Timer's Guide' - Taking the decision to move from being a permie to contracting can seem a little daunting. It needn't be, but from the legal point of view, the first thing would-be Contractors must come alive to is that they're moving into a world of a completely different way of doing business.
Termination before the start date - 27 June 1997 - 'I signed a contract with an agency. Before the start date the agency called and said the client had pulled out. I'd already given in my notice for my current position, and will now be out of work from the end of the month.'
Termination by the Agent - 13 June 1997 - 'Halfway through a tele-commute contract, the work dried up; I spent two weeks waiting for more work, and then the agency terminated the contract without notice. The client hasn't signed my timesheets for the last week's work I did, and has now ceased trading. I haven't been paid for the last weeks work I did, or for the two weeks I spent waiting for work, or for any notice period.'
Early termination - at your peril! - 30 May 1997 - 'I would like to terminate my 6-month contract prematurely. In some of your articles I have seen you mention that if there is no specific termination period then I can give reasonable notice. I intend to give notice of four weeks. Am I legally entitled to do this? Could the agency sue me for breach of contract?'
Another contract that never was - 16 May 1997 - 'I was interested in 2 contracts through 2 agencies. After I'd had the second interview I was trying to decide between them, and had a long conversation with the first agency. He told me the first client liked me, but I had to decide that afternoon. I said yes, signed the contract that night, and they collected it the next day. I cancelled the other applications I had in hand, and was then told that the client had chosen someone else!'
Sauce for the goose - 2 May 1997 - 'I finished my last contract 2 months ago; I've finally found another one, and the agency wants me to start tomorrow. The contract is for 6 months. I have to accept an extension if it's offered, the rate is fixed for a year, and whilst they can terminate, I can't.'
Moving the Goalposts - 18 April 1997 - 'I recently contracted to work through an agency; I was told it would be a 37.5 hour week, at an hourly rate of £28. I signed and returned the contract, and they sent me their part. Two days later, they sent me an 'amended schedule' saying that the Standard Week was now 35 hours, but at the same rate. This means I'll earn £70 less per week. What can I do?'
Restrictions- 4 April 1997 - 'A quick(ish) question which probably affects most people who read FI. A standard clause in contracts dictates that the consultant, or consultant company, may not work for a client for a period after a contract ends. For example, a Contractor was placed with a client by an Agency on a 6 month contract. The contract is renewed for another 6 months. At the end of the twelve months, the Contractor negotiates a better deal by working directly with the Client, missing out the agent. The contract extension expires, and the following day, the Contractor starts a new contract with the Client. Can the agency sue the contractor or his company for "breach of contract" ? Is this a breach, as the contract has in fact lapsed ? Doesn't the Contractor have "freedom of contract" ?'
Change of Location - 21 March 1997 - 'I took a 6-month contract with an agency to work for a Consulting firm on one of their client's projects. The project was based 10 miles from my home, and that's why I took the contract. 2 weeks after it started, the end-client cancelled the project. The Consulting firm now wants me to work either in London, or in Southend, which is even further away.'
20 days...18 days...going down - 3 March 1997 - 'I've contracted for this bank before, and they rang me direct and asked me to come back to do 20 days Project Management. I started last Monday, and on the Wednesday received a contract from their chosen agency - saying '18 days'. On querying this, they said 'that's what the bank told us'. I asked the bank's representative, who replied 'It's 18 days - I thought I was laying down the terms' It turns out that they knocked one day off to give them the money to pay the agency they chose to place me through, and another day because they were bound also to pay another agency through whom I had previously worked - even though I myself am bound by no restriction to that agency!'
Disagreement about rates - 21 February 1997 - 'I've been working on a contract. A rate of £x per hour for an extension was orally agreed with the agent - who then appeared some weeks later with two copies of a schedule for the extension showing a lower rate. I drew his attention to this, and said he'd check his files; meanwhile he corrected and initialled my copy only. We both signed both copies of the schedule. Then a couple of days later he called and said that he had checked his files, and that the old (lower) rate was 'the rate the Client had sanctioned'. I know this can't be true because the agreement they have with the client makes no mention of the rate payable to me. Meanwhile the agency has now been taken over by another agency.'
Competition with the Client - 31 January 1997 - 'I specialise in software within a banking environment. I started a contract through my company with a bank through an agency a few months ago. The bank has now asked me and all the other contractors to sign a document headed "Intellectual Property Right Assignment & Confidentiality Agreement". They claim we should have been given this to sign at the start of our contracts. If I accept this, I won't be able to work for three months after my contract ends.'
Restrictions, Restrictions... - 10 January 1997 - "My company signed a contract with an Agency for the provision of my services to a Client. That contract was extended twice, and will expire soon. The Agency has been persistently late in paying me, and I want to switch agencies when the contract does expire. But I'm concerned about the restrictions in my present contract, which appear to prevent me from doing this."
'Oral Contracts and Implied Terms' - 27 December 1996 - 'I know a verbal contract is legally binding, but what are its terms? I am a software contractor working via a small software house for a larger company. I do not have a written contact, and the large company are slow in signing the contract renewals, and late in making payments. The small company only pay me when they have received payment from the large company. I am incurring bank charges, and the large company has not signed the latest renewal with the small company - it requires three signatures and only the first has been signed by the project manager who has told his superiors that I am required if the project timescales are to be met. On my invoice to the small company, I always indicate 30 days payment. I've had a good relationship with the small company for a number of years. I am enjoying the work, but it is becoming too difficult to make my own payments.'
'The Contract? - Don't leave home without it!' - 13 December 1996 - a look at the serious problems which can arise when you start working before the contract is signed.
'Starting Contracting, and notice periods for the old permie job' - 29th November 1996 -
'Contracting' - 1997 yearbook (to be released Feb 1997) - Do YOU understand what EVERY provision in the contract means? Does the contract truly and completely reflect your understanding of the agreement? Are all the terms of the contract enforceable? Giving Credit - do the arithmetic!
'One month - or Three?' - 15th November 1996 - 'I have been working on a direct contract for two years. Initially for 4 months, the contract has been repeatedly renewed and confirmed by letter each time by the project manager, the latest extension being to the end of October. I then had an e-mail early October saying that I would be needed until February and that a letter confirming the extension would be forthcoming. However, when the letter arrived, it stated that I would only be needed until the end of November. Are they bound by the 3 months mentioned in the e-mail?
'Problems with an overseas agency' - 1st November 1996 - 'I took a contract to work through a Dutch branch of an English agency for a client in Germany. The agency told me they'd find me an apartment, and made promises for payments on specific dates. They let me down on these promises. The agency messing me around affected my work, and the client terminated the contract early. I haven't been paid.'
'Is there an extension - or isn't there?' - 18th October 1996 - 'I was working on a contract; the agency asked me if I wanted to extend - I said yes and signed a new contract about 2 weeks before the end of the initial period. The agency didn't send me back their part of the contract, and two days before the end of the initial contract I was called in by the agent and my supervisor, and summarily terminated - I was told the supervisor had lost confidence in me.'
'Who owns the copyright?' - 4th October 1996 - 'Whilst working on a contract I created a program, based on a specification from the client. Whilst developing it, the client was paying for my time. The program has proved to be very successful. Who owns the software - the client or me ? Am I right in assuming that a principle called "intellectual property rights" relates to software ownership such that the creator of software (i.e. me) is the owner? If the client owns the software, can I "re-develop" the system in my own time and sell that without any obligation to the client? If I own the software, am I entitled to any royalties from sales that the client makes?'
'Terminated whilst on holiday' - 20th September 1996 - 'I've been working at a client's site through an agency for 15 months. The contract was for a year, but at the end of it I just carried on working. A new project leader was assigned to the project I'd been happily working on for the past 10 months, and we had a personality difference. I went away on 6th August for 3 weeks holiday, and when I returned on 28th August found a letter from the agency dated the day I went away and claiming to give me one month's notice.'
'Agent's breach of contract releases restrictions' - 6th September 1996 - 'Another contractor acted as an agent and introduced me to a contract position for 3 months - in fact the contract has now stretched to over 4 years but I've now finished working. He was overcharging the client, and always late in paying me. The client wants to re-engage me direct, but the agent says he wants a payment from me to release me from a restriction clause before he'll agree to this. His late payment causes me financial problems and extra bank charges.'
'The Rate for the Job' - 23rd August 1996 - negotiating with a greedy agency - negotiating rates on an extension.
'The agency says I'll be in breach of contract...' - 9th August 1996 - restraint clauses revisited - "I've been working as a contractor through an agency for a client for some time. The project I've been working on has finished. A former contractor-colleague has won a contract with the client for a new project. He intends to use this contract as the basis for his own software house, and wants me to work with him on it. Initially I'll be working on the new project for the same client. The agency have complained that this would be a breach of my contract with them."
'I don't want to move!' - 26th July 1996 - the client's moving - does the contractor have to go to? "I've been working on a contract in London. There's been talk in the office about my team being relocated to Hertfordshire. London is easy for me to travel to but Hertfordshire would be difficult, and I don't want to go. My team leader mentioned on Thursday that the move would definitely happen in two weeks - when I'll be on an agreed holiday. The following day I signed a three month extension. Where do I stand?"
'The case of the diplomatic cold?' - 12th July 1996 - If you're ill, be prepared to prove it! "I started a '1 month rolling' contract through an agency at the beginning of June. I decided that I did not want to extend it beyond the original month, and I told the agency this on Monday, two days before the end of the month. The agency asked me to work until the Friday, and I agreed. Then on Wednesday I fell ill and faxed the agency to advise them. They now refuse to pay me for any of the time I have worked."
'Oral Contracts (again)' - 28th June 1996 - Going through another agent for the extension, where there's no written contract with the first agent. "My colleague has recently been working on a home banking project. Unlike the rest of us, she has been working under a verbal agreement with a pseudo-agency. She agreed to do 10 weeks work, for which she would be paid X pounds per hour. There have been no problems with this apart from the pseudo-agency taking an awful long time to pay up. At present they are 5 weeks in arrears. She has been offered an extension to her contract. She wishes to take this opportunity to dump the pseudo-agent for a bona fide one. The pseudo-agent, not being too happy about the situation, have started kicking up a fuss to which the obvious reply is "There's no contract" written or otherwise. (Remember the original verbal contract was for 10 weeks only and this has now expired). And they say "if there's no contract we don't need to pay up".'
'When Greed isn't good...' - 31st May 1996 - an agent who wanted more...and more..."I was on my fourth extension to a contract through an agency, working for a local authority. The contract was due to run until 31st May but the workload began to dry up in early April. I discussed this with the client, and agreed with them that I would cease work at the end of the month and then take some holiday. They told the agent, who replied insisting on the 4 weeks notice they say they were entitled to under their contract with the Client. The agent, who is based in Henley-on-Thames, claims that I 'procured the early termination' of the contract with their Client', and that their solicitors say this 'constitutes an unlawful interference with the contractual relations' between them and