As a hiring manager, I’m sure in an ideal world you’d continue to engage all your contractors outside IR35 like the good old days of yesteryear. Well, if you can get on board with this, you’re a huge step closer to doing so.
Having a Right to Substitute clause, and enacting it in practice, is a huge green tick in the outside IR35 column of any determination.
We can appreciate however that you may at this point be on the fence about the ‘Right to Substitute’ and might have found yourself thinking something along the lines of:
- “What if they just bring someone in who’s: too junior / not as good / doesn’t have right experience / a bit crap”
- “Well what if were getting close to an important deadline and they decide to bring in a sub, by the time we’ve handed over and trained the new person we’ll have missed it!”
- “No thanks; I’ll just go back to the agency and start again if they need to leave”
What if we told you that you’re not only protected from those things happening, but if the day ever came that you did have to execute the clause, you’d come away from the situation feeling like you’d gotten a pretty good deal…
We've outlined some of the key points to consider when deciding whether to have a Right to Substitute clause in your contracts, that should help you decide if having one is right for you below:
With a Right to Substitute clause:
- The contractor must legally provide you a like-for-like replacement, as they have been paid to complete a specific role. If once that person starts you are not happy that is the case, you reserve the right to terminate them immediately
- You will continue to pay the same rate as you were for the other contractor, so don’t have to worry about going back out to market and paying more than you had done previously
- You won’t have the hassle of going back to the Recruiter, looking at more CV’s and conducting more interviews, potentially losing several weeks on your projects
- If any training or a handover period is required as part of the replacement the contractor’s PSC must pay for it as part of their obligation to you
- During the handover period of the contractor leaving and the new contractor coming in, you will only pay for the original contractor’s time as part of their contract with you, meaning you get a cost-free seamless handover
- Surprisingly if you’re close to a deadline and the contractor has to bring in a substitute, this could be helpful to you. Whilst they’re handing over to the new person, you’ll have two pairs of hands on deck until the replacement is up to speed, at no additional cost, whilst you complete the release
Without a Right of Substitution clause:
- You’ll have to go back to the drawing board if the contractor does have to leave without a Right of Substitution clause, which could mean weeks of waiting for CV’s, interviewing and then offering followed by waiting until they’re up to speed, which could cost you precious time & money on your project
- The next person you find won’t come recommended from a contractor that has hands on experience and an understanding of what’s required to be a success on your project, so there’s the added risk that they won’t be up to scratch
- There’s nothing to say that you’ll be able to find someone at the same price again, so you could end up increasing the day rate you need to pay
- As there will be no handover period when the contractor leaves, you’ll have to spend the first part of the new contractor’s time getting them up to scratch and catching up on the backlog of work left behind
Hopefully by now you’ll feel more confident that a Right of Substitution clause is something you’d be happy to have as part of your contracts when engaging contractors post April-2021, if that is the case then congratulations you’ve just ticked what our books is the biggest obstacle to getting an outside IR35 determination and you’re well on your way to being one of the companies with access to the best talent available come April.
The other key factors come in the form of Mutuality of Obligation and Support, Direction & Control. If you look here there’s some more details on both, with some details on how they work from a practical standpoint.
If after reading this you’ve been left with a few questions drop us an email on info@thecandidate.co.uk.
Go Back
