^ TopPreparing to go Contracting
Legal issues for contractors: an introduction
Contractors have rights and responsibilities, just like employees. But the law that governs contracting is very different from that which regulates permanent contracts.
Your legal rights when you go contracting
Contractors new to limited company contracting must grapple with rules governing workplaces, relationships and practices: contract law.
Moving from employment to contracting? How to plan handing in your notice
If you’re ready to take the first step to independence and a greater income — that is, to become a contractor, you will need to handle giving notice to your employer properly.
Can I legally go from permanent to contracting at the same company?
Answers the question from a permanent employee on whether they are legally allowed to immediately contract with the same company after leaving.
Contractor Doctor’s recent legal challenges facing contractors
Contractor Calculator’s Contractor Doctor summarises the top legal challenges & solutions that contractors recently faced and overcame.
How contracts are formed in English law
Contractors benefit from a basic understanding of how contracts are formed in English law so they know when to seek professional help.
^ TopContracts with Clients/Agencies
Legal issues for contractors and agents
What are your legal options when you work with agents? This article follows the process through from the first contact to termination.
First-time contracts for contractors
The principles of business law, how contracts are made, and what contractors should look for in their first contract.
Fixed-term employment contracts and contracting are mutually exclusive
Workers hired by clients under fixed-term employment contracts are not contractors running a business, but employees whose employment has an end-date.
IR35 Explained: ‘Contract of service’ and ‘contract for services’
In addition to defining employment status, contracts ‘of service’ and ‘for services’ bring rights and responsibilities for contractors and employees.
Contractors should have schedules in their contracts
Having a schedule in your contract is a great way to stay outside ensure the expectations are clearly defined between contractor and client.
Contractor checklist for contract paperwork
Whilst contractors should avoid standard contracts from agents and clients, most contracts have a similar structure – here’s what to look out for.
Contractor contracts: when you need to draft the contract yourself
When contractors who are contracting direct are asked by clients to supply a draft contract for review, they have a number of sources to choose from.
Contractor contract reviews by a legal specialist
Requesting a formal contract review from a legal expert before signing can save contractors from future headaches if something goes wrong.
Contractors should take care with verbal agreements
It’s fine to have a verbal agreement with your client or agent—these are valid contracts. Just take care in how you handle them.
Force majeure and frustrated contracts - guide for contractors
Contractors may find the principle of frustration and clauses headed with ‘force majeure’ could provide contractual relief, says Egos’ Roger Sinclair.
How contractors should confirm contractual agreements via email
Ideally, contractors should never start work on a project until they have a signed contract, but arrangements can be confirmed by exchanging emails.
Conduct of employment regulations: a guide to opting in or out
Most contractors don’t need the protection provided by the Conduct of Employment Regulations and when asked by their agency, can choose to opt out.
Contractors opting out of the Conduct of Employment Regulations: where do they stand?
Timing is everything when it comes to opting out of the Conduct of Employment Regulations. But in most cases opting out is the best course of action.
Are agencies legally bound to reveal contract margins?
When negotiating rates, it is useful to know the margin the agency is charging. But do they have to tell you?
What contractors can do when a contract falls through
Contractors can choose the legal route if jilted by an agent before a contract starts, but in many cases it’s best to take it on the chin and move on.
Age discrimination and contractors
The Age Discrimination Act of October 2006 will not do much to help older contractors who cannot get work. Age discrimination is real in the contractor workplace, but there are some things you can do about it.
Contractors need to protect intellectual property
A clause in your contract will probably give all the rights to intellectual property developed on the job to your client. But you can negotiate a better deal.
Can my client have a different termination period to me?
What goes in a contractor’s contract is all up for negotiation between them and the client and sometimes the termination clause can be different.
What to do when agencies refuse to change contracts
Contractors with unacceptable contract clauses that their agency refuses to change have a range of negotiating strategies they can apply.
Contractors can use pre-start termination clauses if a client cancels a contract
Contractors can introduce pre-start termination clauses to protect against occasions when a client cancels a project early, before it even starts.
Contractor guide to the ‘restraint of trade’ principles
Contractors may face contracts with restrictions, but sometimes these can’t be enforced due to restraint of trade principles, says Roger Sinclair.
^ TopContract Renewals
How contractors should handle ongoing contracts
You can enter into ongoing contracts without fear of being caught. But attention should be paid to ensure compliance.
How contractors should handle contract renewals
Contractors are never obliged to accept contract renewals. Feel free to negotiate a new contract, and never accept an agent's telling you that you have some obligation resulting from the previous contract.
Can my agent force a margin increase on renewal?
Agents like to force through margin increases when contract renewal time comes up. They have the right to try to do this, but they cannot oblige you to do it.
When contractors are between contracts, they still get paid
When your first contract runs out, and you're still working on renegotiating it or renewing it with the same client, you still get paid for your work.
Contractor Doctor:My agent is refusing to amend my contract – what are my options?
Agencies are often reluctant to change standard contracts as they see this as an unnecessary cost. However, contractors do have options.
^ TopContract Termination/Completion
A guide for contractors: terminating a contract
There are a number of issues contractors should be aware of if they choose to terminate their contracts.
Can I leave early even without a termination clause?
Advises an unhappy contractor how to get out of a contract without a termination clause.
Terminating a contract when you have no termination or notice clause
Contractors have limited options when trying to exit a contract that has no notice or termination clauses, explains Roger Sinclair from Egos.
How contractors should handle being terminated
Being terminated can be a messy business, but contractors who handle it properly can make it a success.
Can clients terminate you before the contract ends?
This agency sent a contractor home a week early and threatened to refuse a reference if the contractor didn't go. The contractor can sue for the full value of the contract, and he can even take action about the reference.
Can I sue the agent for failing to give notice?
If your agent doesn't respect the terms in your contract regarding notice, you still get paid. But you should be careful not to overreact and breach the contract yourself.
When a client unfairly terminates your contract after you’ve given notice
Most contracts have a notice period to allow an orderly conclusion to a project. But what can you do if your client terminates your contract immediately when you hand in your notice?
Handling unfair termination when contracting
If the client or agent blames you for something that clearly isn' t your fault, and terminates you, what can you do?
Client and I disagree over my contract end date – who is right?
Contractual terms are disputed, but contractors who effectively manage their paperwork have no cause for concern, says Roger Sinclair of Egos.
Can I legally challenge early termination by my client?
When contractors are terminated early, close examination of contracts can sometimes confirm there is no legal solution, warns Roger Sinclair of Egos.
Did I breach the contract by leaving early?
If your contract doesn't permit termination, you have to stay the time. Leave early and you could be liable for damages.
Can I sue for a a last-minute contract cancellation?
If the client cancels at the last minute, you probably have the right to get some money for the time and effort you've made.
Handling breaches of contract whilst contracting
When agents or clients breach your contract, you should react with notification, and if appropriate and necessary, termination of the contract.
Contractors need to be careful in email negotiations to avoid early terminations
Contractors should carefully check all emails during negotiations to ensure they don’t say something that could lead to early termination.
^ TopDisputes with Clients/Agencies
Practicalities for contractors when disputes ‘go legal’
Contractors would be prudent to only ‘go legal’ as a last resort and should understand the practicalities of legal action before heading to court.
Can agencies change the rate of pay mid-contract?
This agency is trying to change the rate due to a contractor on a contract that is already in force. They have no legal right to do this. Contractors shouldn't stand for it.
Am I legally obliged to train the client's staff?
Contractors do not have to provide services over and above those agreed in the contract, and clients cannot expect contractors to do so.
Can agencies change contractor contracts midstream?
Suppose the client wants to change the conditions of your contract? You should be reasonable, but you do have rights.
When a contractor signs a contract with terms they’d not agreed
Contractors who sign a contract that includes a mistake may find it is still binding, even if their agent or client was aware of the error.
Starting contracting without a signed contract
Contracting without a signed contract can place contractors in a highly vulnerable position, as Roger Sinclair of Egos explains.
Continuing to work on a contract with no signed contract renewal
Many contractors drift into a contract extension with no signed renewal. That, according to Roger Sinclair of Egos, can leave them vulnerable.
When contractors dispute working hours with clients
Some clients will simply pile on working hours without any consideration about what you've agreed to in the contract. Others will just add a few extra here and there. What are your rights?
When your CV is used without your permission
You have a right to keep control of your CV. And you can do something about it when agents don't respect this right.
Can I be forced to take time off for xmas?
Unless your contract specifies that you are expected to have periods of suspension, there is no reason why you should be obliged to take time off.
When your contracting client refuses to sign your last timesheet
When a project comes to an end, it is vital that you get that last sign-off from the client – not just to get paid, but also because you get a final seal of approval.
Sometimes agents cannot unilaterally cut rates mid-contract
When agents play fast and loose with the rules, getting professional advice early can win the day. Roger Sinclair of Egos tells us about a recent case
Can my client force me to work fewer hours than my contract says?
Is the client in breach of contract by forcing a contractor to take time off? It depends on the contract’s small print, says Roger Sinclair of Egos.
If my client blocks a substitution can I claim breach of contract?
Contractors refused their right of substitution may find their client in breach, and termination could be one outcome, says Roger Sinclair of Egos.
Contractor guide to handling discrimination and harassment in the workplace
Contractors encountering discrimination have few options because they are service providers and not employees, explains Lawspeed’s Theresa Mimnagh.
What can the agency do if I cancel my contract before starting it?
Contractors cancelling their contracts before they start may find themselves liable to pay their agencies compensation, says Roger Sinclair of Egos.
Contracts tainted with illegality are unlikely to be enforceable
Contractors who enter into a contract that is ‘tainted with illegality’ may find that the agreement is unenforceable, explains Roger Sinclair of Egos.
How to break free from a restrictive covenant following a client/agency dispute
Find out how you could potentially break free from a restrictive covenant and continue contracting when the client/agency relationship breaks down.
^ TopContract restrictions
How contractors should handle restrictive covenants: part 1 - the agencies
Many contracts between contractors and agencies include clauses called restrictive covenants: they prevent the contractor from working directly for the client and some others. Here's how they work.
How contractors should handle restrictive covenants: part 2 - the law
This is a largely untested area of contract law. But the law is broadly against restraint of trade in any form, so the burden of proof is on those who are defending restrictive covenants.
Are restrictive contract clauses enforceable?
Are clauses restricting working directly with the client enforceable in a court of law?
Restraint of trade rules do not mean contractors can bypass the agency
Restraint of trade is generally frowned on by UK courts. Roger Sinclair of Egos explains that the law protects both contractors and agencies.
Are restrictive covenants enforceable on overseas contracts?
It is commonplace for UK contractors to have a restrictive covenant in their contract with an agency, but can this be enforced outside of the UK?
Can contractors cut out their agent?
Maybe you can, legally, cut out the agent, but it's probably not a good idea. Changing agencies at the clients request is a better proposition.
Can contractors legally work for a subsidiary?
Can you work for a subsidiary of a client when your agency says you cannot?
Contractors can circumvent poor agents that fail to adhere to the Conduct Regulations
Agencies failing to obtain a contractor’s opt-out from the Conduct Regulations at the right time can be circumvented, says Egos’ Roger Sinclair.
^ TopLate Payment
What contractors should do about late payment
Late payment can become a thorn in your side. You do have some recourse if it does.
Contracting and late payment: correct legal procedure when invoices remain unpaid
Contractors seeking payment from clients and agencies for unpaid and overdue invoices must follow the correct process if they are to be successful.
Chasing payment using a letter before action
A letter before action is a formal letter to the company who owes you money informing them that unless they pay within a certain period you will commence legal action against them.
Contractor guide to charging interest on late payments
Contractors have a statutory right to claim interest on late payments. The law says if customers pay late, they pay interest. Here’s how it works.
How can I chase a large debt - over £50k?
An agency has failed to pay a contractor for three months and owes them £50K. It's not a small claim, under £5k. We explain the process for collecting the money.
I’m 3 weeks into a new contract with no pay – what should I do?
Contractors experiencing payment problems can take formal action, but it’s best to discuss the problem with the agency and client first.
Contractors can get help collecting debts
A debt collector may be able to help contractors collect unpaid fees faster.
How contractors can check their client or agency is financially sound
To the contractor, an agency or client appears secure, but behind the scenes the firm may be cash-strapped. Sid Home from Creditsafe explains how contractors can ensure their client is financially sound.
What contractors should do if their agency or client goes bust
Agency or client gone bust? Phil Richards from accountants Blevins Franks tells contractors what to expect.
Contracting debtors: compulsory winding up of agencies or clients that won’t pay
Contractors owed money by agency or client debtors who refuse to pay can put them into liquidation by submitting a winding-up petition to the courts.
Can clients withhold payment over disputes about equipment not returned?
Clients do have the right to claim compensation from contractors who lose equipment but, as David Royden of Laytons Solicitors explains, they cannot withhold payment.
Guide to debt recovery using High Court Enforcement
Contractors can use High Court Enforcement as a debt recovery strategy when clients with assets won’t pay, says Burlington Group’s Ross Crawford.
^ TopRights + Benefits
Unemployment benefits and contractors don’t mix
Can contractors claim benefits when they are out of work? We explain the issues.
Contractors and employment rights: a huge can of worms
Contractors don’t need employment rights, but situations do arise where a long-term relationship between a contractor and a client starts to resemble having a job.
Can contractors take holidays when they want to?
This client has told the contractor that they cannot take off any time for holidays over the summer at all. Can they legally do this? Where does the contractor stand?
Agency workers directive - how will it affect UK contracting?
The consequences of the Agency Workers Directive, which will make many contractors into employees, are not positive for UK contracting, nor even for the Revenue.
I am being harassed by a client’s employee – what are my rights?
Contractors have no employment rights but, according to David Royden of Laytons Solicitors, the do have the right to a healthy and safe workplace.
What is IR35? Does it apply to your contract?
It is tax avoidance legislation designed to ensure workers using an intermediary but who are ‘disguised employees’ pay the correct amount of tax.
IR35 contract review: Getting your contract reviewed for IR35 status
Advice and guidance for getting your contract reviewed for IR35.
IR35 case law
Explains the meaning behind ‘IR35 case law’ and provides references for finding out further detailed information.
Mutuality of obligation - IR35
Mutuality of Obligation is a common phrase when dealing with IR35 Status disputes. What does it mean?
IR35 legal dangers of the standard agency contract
The IR35 danger with the standard agency contract explained - what to look out for.
What contractors need to know about IR35 compliant contracts
Contractors need to understand that no contract can in itself remove the threat of investigation from the Revenue.
Contractors need the IR35 confirmation letter
Getting a confirmation of terms letter from the client could save you endless trouble and expense if you need to prove that you are outside.
How contractors should prove being outside IR35
You should arrange to obtain and to keep certain documents to prove, as best as one can, that you are outside it.
Should contractors inside IR35 have employment rights?
Contractors caught by the legislation are taxed like employees, yet they have no employee rights unless they go to court to claim them. An unfair situation that the Government should resolve.
Does charging expenses to your client affect your IR35 position?
Legitmate business expenses can be recharged to clients without affecting status as long as some simple guidelines are followed.
^ TopLimited Companies
What is section 660?
What is Section 660? An overview of the legislation and how it affects contractors.
^ TopGovernment Legislation
Proposed changes to managed service companies - explained
Explains the legislative changes introduced in the 2006 Pre-Budget Report
Contractor guide to the Bribery Act 2010: client hospitality and incentives
Contractors operating in the UK with reputable clients are unlikely to be affected by the Bribery Act and can continue to offer clients hospitality.
^ TopWhere to get help
The following organisations have specialist knowledge of the contracting industry: