Why Dont you just opt out and go direct to your client

This was posted by Flash in the Comments section after one of our articles.

Opt Out and Go Direct

If you have not opted out, you can go direct to the client.

If the agency-client has a specific clause allowing for a period of continued hire, you can continue with the agent for that period, and then go direct.

If you were to look to go direct immediately, the agency could invoke a penalty clause with the client (but not against you).

If the agency-client contract lacks this continuation clause (and many do) you can go direct when your contract finishes.

No Penalty Clause

The agency cannot legally enforce a penalty clause on either you or the client.

If you have opted-out (and why anyone would want to I have no idea!) then you and the client would be bound by any restrictive or penalty clauses in the contracts.

It is worth bearing in mind, that a lot of contractors have not actually opted-out (even if they have signed an opt-out notice) as the opt-out must have been done before you are introduced to the client (so before interview) to be valid.

Asking You to Opt Out

This is important. Many agencies wait till they’ve actually got you a contract before they ask you to opt out. However, as it says above, they must have got you to sign the opt out BEFORE they introduce you to te client.

Once you’ve actually gone for the interview they you can’t legally opt out.

So, remember back to when you were put forward? Did they ask you to sign the opt out then?

Did they ask you to sign an opt out after you were put forward for interview?

If the answer is no then you can go direct to your client at the end of your current contract.

Good luck!

IR35 tax was a big success says IT Contractor

This was posted by Bill as Comments after an article of ours about the IR35 Tax.

IR35 Tax

Every person who is now using an Umbrella Company rather than a Limited Company is a testament to the success of IR35 as a tax.

IPSE (the ex Professional Contractors Group) are just looking narrowly at the amount of IR35 tax that the Government collects when they say it is a failure.

Yes, it is corrrect that the IR35 tax itself brings in a pitiful amout of tax a year. Indeed if that was the only criteria then IR35 would be a massive failure.

However, that is not the whole story.

Umbrella Companies

Those in Umbrella Companies don’t pay IR35 tax.

However, they pay their full whack of tax except for a few measly expenses whereas previously they would have been able to claim for lots of things when they operated via Limited Companies.

The IR35 tax has been an unreserved success if you look at the total extra income it has brought to the taxman.

It’s reckoned that there are now, approximately, 200,000 Umbrella Company contractors in the UK.

It’s also reckoned that Umbrella Company contractors pay an average of £10,000 a year more in tax and National Insurance contributions than Limited Company contractors pay.

Tax Bonanza

If you do the Maths, that’s a whopping £2bn a year that the taxman is getting because of IR35.

That’s why the Tories, after they got in last time saying they would look at IR35 again, looked at it and decided to keep it.

The panel they set up said that if IR35 was abolished there was a ‘danger’ that hordes of Umbrella Company contractors would get out of them and go back to using Limited Companies.

You didn’t need a panel to work that out.

The Conservatives accepted this  and went further. Chancellor Osborne said that they would STRENGTHEN the IR35 tax  and hired 36 Compliance Officers to enforce it.

Limited Company Contractors

You would think that the Government would try and force more contractors out of limited companies and into umbrella companies.

After all it is much easier to legislate for and control 250 Umbrella Companies rather than a million contractors with limited companies.

However, in this election, both Labour and the Conservatives are ‘promising’ to cut even the measly expenses that Umbrella Company contractors can get for contractors.

Immigrant Entrepreneurs Creating Heaps of UK Jobs

Immigrant Entrepreneurs

Immigrant entrepreneurs are creating tens of thousands of new jobs in the UK a new survey from Procorre has revealed.

Their survey looked at the nationalities of directors of small companies.

Top ten countries of origin: directors of small UK companies.

Country of origin – Number of directors of small companies in UK

India 16,272
Pakistan 9,903
Germany 7,770
Italy 7,624
Romania 7,490
China 7,439
Nigeria 7,199
France 6,845
Australia 5,513
Bulgaria 4,649

Entrepreneur Visa

According to Procorre, the Government has taken several steps to encourage immigrant entrepreneurs to come here and create jobs. There’s the Entrepreneur Visa which allows people to come from overseas to establish a British business and to get a fast track to British citizenship.

Wiktor Podgorski at Procorre comments: “The UK provides a favourable environment for start-ups and this is reflected in the high number of immigrant entrepreneurs who have chosen to set up here.”

“Immigrant entrepreneurs can benefit from the UK’s flexible legal framework and favourable tax system. They also gain access to a high quality talent pool, a strong local market and valuable opportunities for trade with the EU.”

He adds: “Whilst some of these entrepreneurs will have already been resident in the UK, many will have come from overseas solely to take advantage of the unique prospects that the UK offers.”

Successful UK Start-Ups

Procorre points out that immigrant entrepreneurs have been behind a number of highly successful UK start-ups, including

· Cobra Beer, founded by Indian-born Lord Bilimoria

· e-bookers.com, the online travel agency founded by Dinesh Dhamija, the son of an Indian diplomat, born in Australia

· Euro Car Parts, set up by Ugandan-born Sukhpal Singh Ahluwalia, which was sold in 2011 for £225m

· Made.com – online furniture retailer co-founded by Chinese born entrepreneur Ning Li

Links to High Growth Economies

Immigrant entrepreneurs provide the UK with valuable links to high growth economies. Many of these immigrant UK entrepreneurs will export to those countries from whence they came.

Procorre explains that the UK’s high proportion of immigrant entrepreneurs can help the UK to develop strong links with crucial high growth markets from overseas by providing valuable connections to their home economies.

The global average economic growth is 2.6%. That in the EU is much less.

However, growth in India is 5.6%, in China 7.4% and in Nigeria 7.4%.

Wiktor Podgorski said, “Foreign entrepreneurs’ contacts with their home country could open up valuable opportunities for trade and growth. With such a high proportion of directors of small UK companies born in India, the chance for Britain to establish closer connections with one of the world’s fastest growing economies gives us a major advantage.”

 

Confessions of an Agent. How to take more of contractors money

Take More of Contractors Money

“How to Take More of  Contractors Money” is a follow-up article to “Confessions of an Agent – How to hook your contractor”.

It deals with negotiation after an IT contractor has passed the interview and been offered the IT contract. This is one agent’s experience of how to take more of contractors money at that stage.

Talking Money

Now comes the money bit.

An IT contractor will normally have told you what his rate is or alternatively you may have told him what the rate for the jobs is.

The IT contractor may try to bump up his rate after he hears that he has the job.

Any rec con worth his or her salt should be able to deal with that. Unless the contractor already has another job in his pocket it is almost certainly a bluff.

They are not in the same league of negotiators as we are. After all, we are doing it every day and they are just doing it once every few months at the most.

Opportunity

However, there is still some opportunity to take more of contractors money.

You may have put the IT contractor forward for £500 a day, out of which the contractor has asked for £400.

You’ve got your 20% commission which is quite good but there is still a chance of a drop more.

It is not worth trying this with everybody, but if the contractor is not very experienced or he doesn’t seem very streetwise (quite common) then it’s worth giving it a shot.

Problem

What you say is that he has got the job but thee is a bit of a problem with the IT client. Say that he or she cannot pay more than £375 a day.

This is usually garbage as the client knows the price before the contractor goes to interview. When they say they want the contractor they also mean that they have accepted the price.

However, the contractor is not to know that.

To be frank, it is a bluff on behalf of the IT recruitment consultant.

Three Options

The contractor has three options here:-

1) He can simply say No to the job
2) He can stick to his price
3) He accepts the £25 a day cut

The first one seldom ever happens. IT Contractors seldom, in my experience, do things on principle.

The second one happens often. We usually win but if a contractor does stick out we tell him we’ll get back to the client and see if he’ll pay more. Of course we don’t, but we let the contractor sweat for an hour or two.

Then I would get back to him and say that the IT client would go up as far as £385 but would go no further. It’s not worth the contractor turning down a sure-fire contract for just 15 quid a day.

He’s probably been sweating for an hour wondering if he has lost the IT contract. Sometimes they’ll even phone up and ‘surrender’.

However, what happens in most case is that the contractor simply accepts a rate cut to £375 a day.

Bragging Rights

That means that I now have a margin of 25% instead of 20%.

At several of the IT agencies where I have worked you are rewarded for getting high commissions. The higher the margin is, the higher the percentage that you are able to get in commission yourself.

You also have bragging rights amongst you peers. Recruitment Consultants who can get the highest margins from contractors are normally looked up to by their peers in the office.

Management are usually very pleased too and you let them know right away.

You are also more likely to get promoted if you get higher commissions that the others.

Poker Game

We never thought that we were doing anything wrong here. We believed it was up to IT contractors to look after themselves.

It’s like a game of poker with the better players making the most money.

I’ve met few contractors who were a match for recruitment consultants as far as negotiating is concerned, although the current website proprietor of ITContractor.com gave me a few problems when I got him his two contracts – especially at renewal time. He brought up a few cards from the bottom of the deck himself.

However, most IT contractors are fairly naïve when it comes to negotiating.

As I said in a previous article I am out of the game now and I write these articles, firstly because I was asked to do so, but mostly to help educate contractors as regards helping them to deal with IT agencies and recruitment consultants.

There are lots of opportunities to take more of contractors money. We always took them.

Being forewarned is being forearmed!

Colleagues that suck – An IT Contractor’s Experience

Colleagues That Suck – The “standards” guy

This is a non-technical person who’s managed to con his way into a well-paid technical role. Not bothered to learn the difficult skills involved, he tries to find something else to do. That something always turns out to be “standards” otherwise known as “telling people who know more than you how to do their jobs”.

This guy will tie you up in endless meetings to discuss boring documents he’s written. All his recommendations will either be impossible, stupid, or inconvenient; but management will love them. Before long he’ll have you spending more time on his red-tape than on actual productive work.

Colleagues That Suck – The smelly food eater

This person will be sitting beside you having curry for breakfast on the morning you’ve got a hangover.

Colleagues That Suck – Mr Disagreeable

Any meeting with this guy quickly turns into an argument. He lives to contradict others. He never makes any suggestions of his own.

Colleagues That Suck – The Parasite

Another one of those pesky technical people who’ve never bothered to learn technical skills. This person drifts from project to project attaching themselves to more competent colleagues or “mentors” as they sometimes call them.

They make sure the mentor is accountable for the project, so it will be guaranteed to be done well. Then they send the odd email, produce a couple of documents, and wait for the credit to roll in. If the project goes wrong, they make sure that it’s known they were only there to learn.

Colleagues That Suck – The attractive girl with a short skirt

At first this person appears as if she’s going to be a great colleague. It won’t be long until she has your entire team at each other’s throats though.

Colleagues That Suck – The code thief

Now I don’t mind when other people use my code in their applications, actually I find it flattering. What I do mind is when they just rip it out without telling anyone else and then pass it off as their own work.

I also don’t like it when components or applications of mine are given cosmetic changes that make it look as if they’ve been reworked rather than just stolen.

Colleagues That Suck – The nitpicker

Prepare to have anything you ever do gone over with a fine tooth comb and mistakes pointed out to your boss. This guy won’t be happy until you’re a quivering puddle of humiliation.

Colleagues That Suck – The music imposer

The company doesn’t provide you with sound cards or speakers? Don’t worry, this guy bought his own from home. We all know that nothing helps more than blaring New Guinean rap music when you’re struggling with a difficult technical problem.

Colleagues That Suck – The seventy-hour week guy

He’ll be in when you arrive and still working when you go home. He’s often in on the weekend. It’s only a matter of time before management starts encouraging you to follow his example.

Colleagues That Suck – The mobile phone left on the desk person

Always in meetings or out to lunch, his mobile phone rings constantly at full volume. His choice of music? The Ride of the Valkyrie, of course.

Go Direct | Can you dump your agency and go direct?

Go Direct Contracting

With the Agency Regulations in effect for limited company contractors, we asked an expert whether IT contractors could then simply dump their agency and go direct. Here are their answers.

Go Direct Questions

1) As regards contractors who have current IT contracts, when it comes to their renewal time, are they free to talk to their clients about going direct and cutting out the agency?

2) It has been suggested that IT contractors can opt out, take a contract through the agency, and then opt out after they have started work. Is this correct? If so, it would mean that they could go direct at the end of their contracts.

Go Direct Answer

Both of the questions are resolved by the client – agency contract.

If the Agency has terms with the client to say that the taking on of any contractor is subject to a fee or alternatively a new contract under the current terms, then this is allowable.

It does not matter what contract the supplier has as there cannot be any restrictions in the agency/supplier contract, but they will not be offered a place by the client without the client being charged.

Can Go Direct

If the agency has only got a restrictive clause in their agreement with their client and not a continued supply clause (due to apathy), then if the contractor has not signed an opt out, it does appear that they could go direct!

Again if someone opts out, then back in whilst in the contract as long as the agency – client contract has a continued supply and a placement fee alternative, they will be restricted in going direct by an allowed fee to the agency by the client.

Note

ITContractor is not responsible for these opinions and you should take legal advice before taking any action.

Can I book travel expenses after 2 years at same location

Travel Expenses

This question was sent to us and was answered by one of our Accountancy readers. Add to the advice, if you like, in the comments section after the article.

Harvey Asks a Question on Travel Expenses

Hi

Can anyone give advice. I am currently a IT contractor and have been contracting in the same location just under 2 years.

The concern I have is that I have been told by a colleague of mine that I will be unable to book travel expenses against Tax after 2 years working in the same location. Is this correct?

Also can anyone tell me if I can do a short contract at another location i.e. 2 weeks will that reset the 2 year rule. That may be a way round it if I can do that.

It would be much appreciated if anyone has any experience they can pass on or a contact who I can discuss this with further. All help will be appreciated.

Thanks in advance for that,

Harvey

Top Accountant’s advice to Harvey

Hi Harvey,

This is quite correct, you cannot claim travel expenses after 2 years as it will be deemed that you are a permie employee because have been there for so long. You might also have problems with IR35 after a couple of years in the same place.

By doing a short contract you could reset it but it all depends on the length of the short contract. If it is anything less than 9 months and you could be on shaky ground there.

Travel Expenses are for someone who is working in a temporary location. You can hardly claim it is temporary if you have been working there, with the same, client, doing the same ob, for more than two years.

Good luck, anyway – and let us know how you got on.

Can anyone help me asks IT Contractor

Help Me

This was posted to our General Forum by an IT contractor asking for advice. I’ve replied there, but as he needs the advice at short notice, I though I would post it to the articles page as well, to see if anyone else has any advice.

Help Me – Call for Advice

Hi.

This is a warning, and a call for advice, and a chance to rant all rolled into one convenient post.

I’ve been working directly with clients for about 2 years now. My invoices are rarely paid on time. I understand that this is common practice in the business world, but this time around one client is being really, really arsey.

I agreed to work on a weekly rate building them a web app. I told them it would take about 6 months.

When I met them, they showed me their currently live product, which was utter ****e.

I told them it wasn’t worth doing any fixing on, but agreed that I would fix it so that it worked at a reasonable speed, but nothing else.

I worked and worked, and during my time working, I was asked to carry out fixes to the old site. I said that this would push back the launch of the new site, but I was told that there would be budget by the project manager (a friend of mine, who got me the job).

Budget Gone – Help Me

Then one day I’m suddenly told that there’s no budget left (this was 6 months after I started), and that I’d have to have it live by the next week (!). We hadn’t even begun testing, but because he was a mate, and because I take pride in my work, I said I’d put it live for them at no charge.

The PM was in the total **** from the people he was working with, who are very awkward, totally clueless about building software, and hate techies because they’re been burnt by cowboys in the past.

Because the PM was a mate I agreed to do a few bug fixes, on the condition I was paid on time (15k left to pay, owed April 1st). As part of this I have a letter signed by the directors of the company saying that they owe me this money. I thought this would help me.

Promises

After constantly being promised that I was going to be paid on certain dates, I’m still owed 5.5k. Last week I found out the project manager has had a nervous breakdown. That doesn’t help me at all.

Now I’ve been called by the commercial director of the company to say that he wants me to come in for a meeting this week to finish up and sign some bits. Thing is, I got this through my PM friend, and even offered them a reduced rate.

Also, when I work with this mate of mine, we have an agreement that if any code I write doesn’t work properly, I’ll fix it after the end of the project for free, because I take pride in my work.

Now I’m pretty sure the directors of this company are going to ask me to sign something to put this in writing and say I’ll fix anything within 3 months.

I’m confident there’s no/few bugs in it, but I’m pretty sure I’m going to refuse. These people are so difficult, and I really don’t trust them.

I owe them nothing.

I’ve done what we agreed, and they haven’t paid me. This doesn’t help me at all.

Need the Product

They NEED this product live because their old version is utter ****e and is embarrassing them every day.

I have all the source code, and am not letting them have it until I’m paid.

Really, I don’t think they have a leg to stand on because I have this signed letter, and because I have their source.

The reason they’re being so arsey is because they’ve been ripped off by developers in the past.

I guess I’m asking for advice, but also providing a warning to others.

No Formal Agreement

Because the PM was a friend of mine, there was hardly any formal documentation about what we’d agreed. This seems so insane now, but in a comfort zone with a friend I’ve worked with many times, it didn’t cross my mind that it would be necessary at the time.

That’s why I’m glad I have the letter.

A warning to all others – things are done formally at organised places FOR A GOOD REASON!

Anyway.

I want more work out of these people because it’s something I’ve built and can add to quite comfortably, and they hate working with techies because they’re so clueless, and I want the product live because I don’t want my mate to be in the doodah. So I think I’m going to tell them that I’m doing nothing more until I see the figures on my bank account.

Any Advice?

Any other advice from anyone?

This has been such a nightmare. Help me if you can.

I feel like my hands are so tied because I have to look out for the interests of my friend too, although I deeply suspect he’s wooling things over for both me and the client.

I’m thinking this is the last time I work with friends.

They love the product I’ve built too!

You’d really think they’d want to keep me happy after all the cr*p they’ve had in the past?

MD Calling

MD’s ringing me this afternoon apparently.

I feel so helpless as a one man band versus a company.

Does anyone have any advice on either how I can ensure this doesn’t happen in the future?

A friend has advised me that it’s best to have a date each month when all clients pay currently outstanding balances for what’s been done.

All of a sudden I’m missing working for an agency!

Help me with some advice.

KR.

Can agencies get away with mistreating IT contractors forever

Mistreating IT Contractors

IT Contractors have always complained about some agency tactics and their treatment by them. Will this come back to haunt agencies? Can they get away with mistreating IT Contractors forever?

Many agencies say that they have no time to contact contractors to tell them that clients do not want to see them for interview.

When a contractor goes for an interview, the agencies say that they have no time to contact contractors and tell them that they have not got the job.

They say that there time is better spent trying to find out which clients have got work and in trying to place contractors.

Commodity Brokers

Some agents have also said that contractors are not their customers and that it is the clients who are their customers – and that contractors are just commodities. This is their excuse for mistreating IT Contractors.

They also do things like calling up out-of-work contractors telling them that they may have a job for them and asking them for the names of people who they have worked for, companies where their CVs have been sent, and companies where they have had interviews.

Wiser and more experienced contractors will know that these agencies are only looking to generate leads for themselves. They will be in touch with those companies looking to place other contractors.

However, all contractors, before they become wiser, will have been caught out by these tricks at some point in their careers. Mistreating IT Contractors by agencies is endemic.

Self Justification for Mistreating IT Contractors

Our article “Top Ten Tricks used by Recruitment Agencies – Beware” was picked up by another website.

There one agent justified mistreating IT Contractors by the following:-

“Finding out where jobs are, what managers recruit contractors and the like are what keeps the market moving AND what keeps YOU contractors in jobs.

“This is the way IT recruitment has always worked. If you don’t like it find a different career.

“EVERY CONTRACTOR has been put forward for contracts AND secured contracts which were picked up in this way. That’s the way it works”.

More Care Needed?

However, with recent information showing that fewer and fewer contractors are now using agencies to look work for them, do agencies need to drop the idea that contractors are just commodities rather than customers?

Do they need to take far more care in how they interact with contractors?

Should they stop mistreating IT Contractors?

Does it really not matter how agencies treat contractors?

Does it really not matter whether agencies give contractors the common courtesy of telling them that they have not been accepted for interview or have failed to get a job at interview?

Danger Signals

Those agents who say that contractors just don’t matter may be right.

However, they face the danger that, if their image with contractors remains as low as it is, that more and more contractors will simply bypass them and go direct to the client.

They have always had the desire to do so and it was only clients being fearful of legislation that has prevented it.

However, with the last downturn having forced a lot of clients to look at removing costs, including the middle-men agents, and with legislation like the Employment Agencies Act which appears to show the Government and EU coming down on the side of contractors, the worm may be turning.

Rogue Agents

It could be that some agents’ previous disdain for, and mistreatment of, contractors may come back to haunt them.

They, and especially the rogue ones, will have only themselves to blame for that.

They have to stop mistreating IT Contractors.

If agencies are to prosper in the future they may have to take the radical step of considering contractors as valued clients.

Now that would be something!

Are IT agencies making up the jobs on IT Job Boards

This was sent to us by a reader.

Making up the Jobs

Are IT Agencies just making up the jobs on IT Job Boards?

I applied for a job on one of the job boards that was just up my street. I sent my CV off within minutes of the job being posted. I called up the agency within 15 minutes of it being posted.

The agency said that the job was gone.

How can it have gone so quickly?

How quickly do jobs go nowadays?

Are they just making up the jobs?

I must say I was a bit disappointed. Imagine my surprise when the same agency posted what looked like exactly the same job the next day.

I must say that I was more than a little annoyed, so I called up the agency asking what it was all about. They said it was a different job. I asked if I could be put forward for that one. They said it was already gone.

Same Job Ad

I did some investigation and saw that they had been putting on pretty much the same job spec for the past couple of months.

I called them up again and asked what was going on. Did those jobs really exist or were they just trawling for CVs. Were they making up the jobs?

They said that the jobs did exist and the reason that they put in many similar job specs over that period of time was because they specialised in that particular area.

I said to them “Well if you specialise in jobs for that particular area and you have jobs for that combination of skills almost every day, could I have one of them, or at least be put forward for some of them”.

Bad Reference

The guy hummed and haa’ed for a few seconds before he said that the reason that they hadn’t, and couldn’t, put me forward was because they had had a bad reference for me.

“But you only received my CV yesterday and you haven’t put me through for any roles, yet” I replied.

“Who did you contact” I asked?

“We’re not allowed to reveal that”, he replied.

Needless to say I didn’t believe this so I phoned up my bosses at the only three companies where I had worked and asked if anyone had called asking for references for me. Each of them said a quite definite “No”, and told me that if anyone did that they would give me a good reference.

Getting Angry

By this time I was getting very angry.

I phoned up the agency again and told them that none of my three firms had had any requests for references.

I must give this guy credit and say that he is very quick on his feet. He is never short of an answer.

He said, “It was an ex-colleague of yours – someone you used to work with that we have on our books”.

Of course he wasn’t allowed to say who it was or where I worked with him.

Telling Lies

It seems pretty obvious to me that this guy had been lying through his teeth the whole time. There was never any job. They were making up the jobs.

If he had just been honest and said to me in the beginning “This is a standard ad of ours and there was no particular job. However, we specialise in this area and get a lot of requirements in this area” then that would have been fine. If he told me they were making up the jobs I would have accepted that.

I would have been happy with that and happy that I had my CV with an agency who have regular requirements in an area where I specialise.

It’s the lying and deceit that gets me when there is no need for it.