Not signing a contract - Brookson Ltd

Not signing a contract

As the contract plays a key role in determining your employment status it is important that you consider your contract from an IR35 perspective. The contract sets out how the parties intend to work together on the assignment, so it is therefore essential that you start out on the right foot.

Brookson is on hand to offer you support and guidance on every aspect of IR35 Compliance. This includes reviewing the contract for services as well as your working practices whilst on the assignment. We can offer suggestions to improve the contract if required, or simply provide you with peace of mind that your way of working complies with IR35.

Understanding a contract

Any contract that you agree to must be acceptable from an IR35 perspective to support your working practices. It is therefore crucial that you understand the terms of the contract before signing it.

It is also prudent to understand the commercial terms of the contract prior to signing it. This includes reviewing clauses relating to payment terms or termination of the contract. Whilst the commercial terms of a contract do not have a direct bearing on your IR35 status, it is advisable that you are aware of those clauses that may have a direct impact on your limited company.

Once signed, the contract is legally binding on all parties. Therefore, unless the contract is changed with the consent of the other party or in accordance with the contract, you may not get a chance to change your mind!

Not signing a contract does not mean that a contract does not exist. In these circumstances, the contract will be valid without it being signed by both parties provided that both parties have seen it and acted upon it. For example, if you have provided the services detailed in the contract and invoiced at the rate set out in the contract, you will also be required to give the notice period in the contract if you want to terminate the relationship and also comply with any other term of the contract.

If you refuse to sign a contract but provide your services in accordance with it then the contract will be deemed to have been accepted by both parties despite it not being signed or expressly agreed.

If you do not agree with the terms of the contract

You are in a better position to discuss changes to a contract before you start working under it so the  other party cannot claim that it has been agreed and therefore is not negotiable.

However if you disagree with some of the terms of a contract which you have not signed, yet are working under, it is highly unlikely that you will be able to argue that the entire contract or certain terms did not apply simply because you have not signed it.

If you disagree with something in the contract but continue to work in accordance with the clauses you disagree with, you could be signifying your acceptance to the contract without realising it.

For example, you may disagree with the rate specified in the contract, but you continue to raise invoices for that rate as opposed to raising your disagreement with your agency/client. In this example, your actions will amount to acceptance at the rate specified in your contract rate, regardless of whether you agree with it.

If you have signed the contract

If you have had the opportunity to review and subsequently sign the contract, then unless the agency/client agrees with your request to amend the contract, you will remain bound by it.

If you do not agree with a term of a contract further down the line

You need to inform the agency/client immediately of the clause and the reasons for your disagreement. The agency/client may also request that you submit an amended clause to them for their consideration.

What Brookson can do for you

Your IR35 status is dependent on both the terms of your contract and your working practices and at Brookson we place great emphasis on compliance with the IR35 regulations.

As a Brookson Customer you have access to our IR35 Review service that provides you with complete, all round support for your self-management of the IR35 risk. This involves both a review of your working practices, and the contract.

IR35 Implications

It is vital that you understand the role of the contract for services in determining your employment status. In the case of Alstom Transport v Tilson (“Alstom”) the Employment Appeal Tribunal highlighted the fact that genuinely self-employed workers should not only declare their employment status but ensure they maintain it in practice; this means ensuring they have a contract in place that accurately reflects their working practices.

The Alstom case lends weight to the fact that those independent contractors who wish to ensure compliance with IR35 should ensure that their contract accurately reflects their day-to-day working practices. Where the two conflict, this is likely to lead to further complications for contractors.

Commercial Implications

More often than not, contractors fail to consider the commercial terms of their contract. Whilst this has no effect on an individual’s employment status, it is worthwhile to note, and prudent for a contractor to understand what commercial terms they are signing up to.

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