Working on a contractual basis has its own set of perks. You have the liberty to take up projects you really like, choose clients based on your judgement and past experience, manage your time and resources accordingly and at the same time maintain a healthy work-life balance.
If you are happy in this arrangement, good for you. But you should also be aware of the issues that arise because “you” are a contractor. Apart from zero job security, there are also high chances of late payments or even getting duped by the client.
Moreover, you can also misunderstand the terms of contract and sign the dotted line only to land in trouble later. We understand the excitement you feel on landing a new gig; but it is advisable to take this first step slowly and read the contract methodically and carefully.
Here are 4 points you should always look out for in a contract:
This clause allows someone else to do your job in your place. If your line of profession allows that, then do be sure to insert this in the contract. Substitution rights are of two types:
a. Fettered – which requires prior consent of the client
b. Unfettered – which allows you to assign anyone to do your work but doesn’t hold you responsible for the work done or not. It is also considered inappropriate and most clients would also not be a part of this as it is your expertise that got you the job in the first place!
There will be many contracts which do not allow substitution so make sure it as appropriate before adding it.
- Mutuality of obligation
For your contract to be pro IR35, there should be a clause that clearly states there is no “mutuality of obligation” between you and your client. This is just to bring clarity to the point that if there’s no work, then there’s no pay and vice versa. However, this clause also gives your client power to bring your working relationship to a stop without any further obligation to pay you.
- Clarity in terms of work profile
If you want to be on the safe side of IR35, then it is important for you to make sure your contract clearly states the deliverables, timelines, constraints and dependency in the contract itself. So even if you have been given a fancy work title, make sure your rights and tasks are properly laid out on the legal document.
The beauty of “working on a contractual basis” lies in managing various clients and projects – at the same time. Any undue restriction on you providing services to other clients is a strict “no-no”. Hence, make sure your contract doesn’t create an employer-employee relationship.
If you sign a contract, you are legally bound by its terms & conditions. Therefore, you must read the entire document with care and precision. Always remember: your client is likely to be better acquainted with the legalities of your arrangement. Therefore, your job is to go through each and every line with great detail.