With so much bad news swirling around IR35, it's easy to lose sight of the fact that contracting is, in fact, one of the best ways to work. IPSE's latest study showed that the number of self-employed people in the UK is the highest it's ever been (a whopping 5 million), despite the looming changes to the off-payroll rules and an epidemic of blanket status determinations. Contracting's not going anywhere, so we're here to help you stay on the right side of IR35 - plus address some FAQs along the way. One we often get asked is: what is a contract schedule and why do I need one?
A contract schedule is a critical part of a contract for services, and it's something that many agencies don't focus on as heavily as they should. Read on to find out what a contract schedule is and why you need one.
What is a contract schedule?
A contract schedule is a single or few pages, either before or after the main agreement, that outlines a timeline for the services provided. It should specify key details and milestones, particularly if it's a lengthy project.
Do I need a contract schedule?
In short, yes, you should ensure that your contract includes a schedule.
Try to avoid contracts that don't include a schedule wherever possible. In cases where a schedule is not included, you'll often find that it's replaced with just a few simple sentences. Without a schedule, it's often not clear what services you are expected to provide which could, in turn, have a negative affect your IR35 employment status.
What should a contract schedule include?
Ideally, a contract schedule should include a specific list of deliverables and their corresponding deadlines; the more detailed the list of services, the better for your IR35 status. Schedules often include other key details such as contract start and end dates, fees, and any specified client or agency contacts.
Contract schedule do’s and don’ts
Avoid naming only yourself as the 'Consultant' or 'Representative'
If you are named as the sole 'Consultant' or 'Representative', it could be construed that the end client requires you personally to provide the services. If this is the case, it creates the impression that your end client would not accept a substitute. For the sake of an outside-IR35 determination, this should be avoided.
A simple change such as 'Consultant(s)' or adding 'or such a substitute as is agreed upon by both parties' should remedy this.
Don't state that you have a line manager
If it's stated in your contract schedule (or anywhere in your contract, for that matter) that you have a line manager, it could be a concern for your IR35 status. You should not be controlled or supervised by the end client in the way you provide your services.
The good news is, this is easily fixed - refer to them instead as a 'client contact'. A client contact is viewed as having less influence over how the work is to be done, and are typically in place only to receive reports of the progress of services.
Make sure you have a clear contract end date
If your contract schedule appears to be ongoing with no set end date, it could mean bad news for your IR35 status.
Including a set start and end date for the agreement shows that you're engaged for a specific set of tasks rather than an ongoing job, which could be indicative of an employer-employee relationship.
Avoid lengthy notice periods
Be aware that lengthy notice periods could affect your IR35 status - both parties should be free to terminate the contract. If a contract can be terminated without notice, it demonstrates financial risk which is always positive for IR35 status.
Any notice period up to 4 weeks is considered acceptable - however, an immediate right to terminate is ideal.
Don't have one set address as your work location
Be aware that if the location is listed as being one set address, it could affect your status. Remember, you should have the freedom to decide where you provide your services from.
Your end client should not be able to control where you are expected to work. If a specific location is listed, then it should be followed up by the requirement that any other locations are allowed if 'mutually agreed upon by both parties'. This would allow you to provide your services from wherever you wish, which is how HMRC expects contractors to operate.
Make sure to include a description of services
Be wary if your services are summed up into a job title. This could make HMRC have reason to believe that you are an employee with an ongoing role, as opposed to a temporary addition to the workforce.
Ensure a description of the services is included in your contract schedule. This will clarify that you are engaged for certain services rather than the day to day work of an employee.
Avoid set working hours
If you are required to provide services during specifically required hours, be careful. Any Dolly Parton’s out there working 9-5 Monday to Friday, this could negatively impact your IR35 status. Being instructed to work specific times is indicative of employment.
If hours are specified, it's better to keep this non-specific. Listing it as 40 hours a week would imply that it is your choice as to when you provide the services therefore strengthening your IR35 status. Of course, for certain professions like locum vets or nurses that require you to follow surgery times, or for projects that require you to work with people in different time-zones, reasonable allowances can be made.
Don't specify overtime pay
Does your contract schedule list increased rates of pay for services provided on weekends or bank holidays? Its time to get this changed - after all, you're free to work whenever you want as a genuine contractor. Only employees should be eligible for increased rates of pay.
Ensure you that your contract schedule, and indeed your contract in general, specifies that you have a flat rate of pay.
How Larsen Howie can help you prepare for IR35
It's understandable to feel overwhelmed about the IR35 reform. Ensuring you're outside of IR35 can often feel never-ending, but it is best to be proactive. Larsen Howie offers both a contract assessment and a full review to help you learn more about your IR35 status and offer guidance on how to improve your position.
However, if you're concerned about the contents of your contract schedule, we recommend a full review. Our IR35 full review provides a detailed breakdown of the contract and schedule, including analysis of which clauses are positive, which are negative, and which are neutral on a clause by clause basis. We also offer IR35 investigation insurance with representation from Andy Vessey, should it go to tribunal.
For any further information or guidance, please call us on 01163 800 400 or drop us an email. Alternatively, take a look around our Knowledge Hub for more IR35 advice, industry news and contractor guides.