Because the recent Tilson ruling so clearly flies in the face of the James v Greenwich guidance, which put an end to any hope of contractors within IR35 getting employment rights from clients, many ‘permtractors’ are no doubt rubbing their hands with glee, anticipating future rulings in their favour.
And genuine contractors may have cause for celebration too, because clients might start insisting on IR35 friendly contracts and working relationships, driven by the fear of finding themselves hauled up in front of endless tribunals.
Until now, in the eyes of clients and agents, contractors have been a right royal pain in the backside. As they’ve seen it, contractors have kept wanting to change contracts, bleating on about the ‘unfettered right to substitute’ and other irrelevant issues that cost time and money to fix.
Now we could find the boot on the other foot. Clients will be reaching for their lawyers, seriously afraid that the Tilson ruling might have opened the Pandora’s Box of employment rights claims from long-term contractors and those within IR35. The result might be clients and agencies taking ownership of what has previously been seen as a ‘contractor problem’.
Hopefully, we should be seeing clients and agencies offering proper ‘contract for services’ agreements, rather than quasi-employment contracts they so often try to foist on unwary contractors.
I’m not saying I approve of what Tilson has done and what many other permtractors are likely to try to do. A contract should be mutually beneficial, whereas some permtractors are fighting for the best of both worlds – the higher earnings that come through contracting through a limited company, combined with the rights of being directly employed by the client.
But the more claims we see in the coming months, the tighter clients and, by default, agents will become over IR35-friendly contracts and working practices.
Contractors caught by IR35 could do us all a favour and claim employment rights, even if they lose. At the basic level, it is free to do and if enough contractors went to tribunals then some would win, forcing clients and agents to behave in a more contractor and IR35 friendly fashion.
Who knows, we could see IR35 die a quiet and lonely death via the back door because no contractor would get hired if they have been classed by HMRC as a ‘disguised employee’. And if a few permtractors have their cake and eat it, we can watch while HMRC sneaks up on them in a couple of year’s time to make sure they pay back taxes, interest and penalties for all those years they were really, by their own admission, employed.
A good, just and fair result all round. Well done to the men and women in wigs!
Dave Chaplin is a former IT contractor in the City of London, and is founder and CEO of ContractorCalculator, and author of the Contractors' Handbook.
Started in 1999, ContractorCalculator (this site) is the leading independent website for the UK contracting industry – most of whom are highly skilled knowledge workers.
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Published: Tuesday, July 21, 2009
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