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Issue Explanations (if required) YES/NOCan your company terminatethe contract on giving notice ofa reasonable period?Are any clauses requiring you oryour company to act in the bestinterest of the clientreasonable?Are Professional Standards andperformance requirementsreasonable?Are Liability and Limitationrequirements reasonable?Are Confidentialityrequirements reasonable?Is Copyright & IntellectualProperty provision adequate?Are suitable provisions madefor variations to contract?Is there a suitable GoverningLaw e.g. English Law, stated inthe contract?Are all other commercial termsreasonable?Your company should be able to terminate the contract with anotice period not exceeding one month.If any clauses are present that require your company or youpersonally to act in the best interest of the client, they shouldnot be reasonable.Any such provisions should not be unreasonable.Where there is a liability provision, it shall be reasonable; andwhere an amount of required or advised insurance cover isspecified, total liability shall be limited to that amount.Such provisions should not be unreasonable and should excludeinformation already known to you (independent of anydisclosure by the client), and should exclude information in thepublic domain.Contract should make clear that ownership of any of your/yourcompany’s own IPR which you may intend to use with theClient’s agreement in the course of the contract should retainedby you/your companyContract should expressly say that any change should be inwriting and signed by both parties.Contract should make clear what law is intended to apply to it.This could include anything that seems either out of place in acontract of this type, and/or which is commercially unbalancedto a point where it significantly changes the obligations or risks,or that you do not understand, or of which you do notunderstand the implications
Now please read through the following section and answer accordingly.The extent to which the contract satisfies the generally accepted tests for IR35friendliness should be considered, with particular reference to the aspects set out in thequestions below.Whilst naturally desirable, it is not always necessary for there to be a ‘yes’ on eachindividual question, provided the overall position indicates at least a ‘probable yes’.For example, it is understood that there are many scenarios where substitution isunrealistic. A ‘no’ on that issue alone would not necessarily result in the contract beingconsidered to fail, provided the other aspects relevant to IR35 were sufficiently strong,and showed a clear intent for a ‘non-employment’ type of relationship between theindividual contractor and the client.Issue Requirements Yes/NoIs the contractclearly “forservices” ratherthan “of service”?Is a provision forsubstitutionclearly defined?Is there Mutualityof Obligationbetween you andthe Client?The services you are to provide should be specified as such, and not by reference toa role or position titleYou should have a substantially unfettered right to substitute – ie without priorapproval, subject only to a right of the client to object to any individual onreasonable and objectively defined grounds, and on the basis that you remainresponsible for sourcing and paying the substitute, and for the overall quality ofwork.Basic: There should be no obligation on you as an individual to provide servicespersonally, and no unqualified reciprocal obligation to pay for services actuallyprovided 2 .Extended: The basis for payment shall be for services actually provided, withoutany obligation on the part of the agency to provide work or pay in lieu, and withoutany obligation on your part to accept and undertake such work as may be offered.In particular, the contract should not entitle you to payment in lieu of notice. 3Are there nounreasonableControl elementsenshrined in thecontract?The particular interest here is control of a particular type – whether you agree ‘thatin the performance of the service you will be subject to the other’s control in asufficient degree to make that other master.’ The degree of control should becapable of being distinguished from an employee undertaking similar tasks.Your position should be that of an independent professional, accepting responsibilityfor the services you provide, and not subject to the direction and control of theClient, save where a necessary consequence of the services themselves1 IR35 status is defined not just by contractual terms, but also working relationships. It is advisable to confirmworking relationships in a Real Arrangement Letter – see PCG Guide to IR352 In the absence of mutuality at this Basic level, the authorities suggest that the hypothetical relationshipimposed by the legislation cannot be one of ‘employment’.3 Absence of mutuality at this extended level would generally be regarded as a pointer away from thehypothetical relationship imposed by the legislation being one of ‘employment’. Where there is a degree ofmutuality at both levels, it would generally be regarded as a pointer towards the hypothetical relationshipbeing one of ‘employment’
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