Subcontractors Agreement: Need some help

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stingray

  • #1
    I run a small plumbing and Heating firm and have decided to switch all employment bar myself to Self Employed and use Subcontractors to reduce the business overheads and for times when work is low.

    I’m looking for advice on the following things I would need.

    1. A Contract between us and the Subcontractor; offering the following:

    a) 2 pay schedules ( fixed hourly rate for rated work and a percentage of job value for quoted work),
    b) we want to retain 15-20% of monies for 35 days incase of call backs
    c) Protecting of Compete and solicitation

    I am Aware of the CIS scheme and am registered but I would need some help with the contracts.

    Any one believe they can assist me or an estimate of a cost?


    Thanks
     
    Alpha

    Alpha

    Free Member
    Feb 16, 2004
    3,192
    474
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    West Midlands
  • #2
    Be very careful as the inland revenue are attcking CIS sub contractors in much the same way they did with consultants under IR35.

    If the sub contractors do most of their work for you and no one else the revenue will still classify them as employees and require them to be taxed accordingly (especially the employers NI payments).

    Your contract with the sub contractors will need to be very specific regarding their terms.

    You will certainly have to make sure that they are responsible for all their own costs. There can be no guarantee of work for them. All travel and subsistence costs will need to be met by the sub contractor.
     
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    A

    annethedonn

  • #3
    Hi Stingray

    My solicitor drew up an agreement between mycompany and contractors - I can send you a copy of what he's done if you want to modify it - a bit cheaper than what it cost me!!! Sub-contractors usually means that the contractors employ contractors on their behalf. As Alan states, you need to prove to the IR that they are self employed, ie you don't pay their wages & NI. Getting them to work on a per job basis, rather than hourly would help. If you want anymore info, just let me know as I've been through this already.
     
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    bwglaw

    bwglaw

    Free Member
    Apr 8, 2005
    4,567
    242
    Richmond, Surrey
  • #4
    Have you obtained agreement from all your staff to change their employment status to self-employment from being employed? They are likely to lose several employment rights.

    When drafting the contract it needs to be clear whether they are employed or on their own account i.e. self-employed. Sub-contracting is not recognised in law but it is a term used loosely by many tradespeople and the IR. Sub-contractors can be employees or self-employed.

    I would advise not to use model contracts or buy online because they might not suit your business. Each clause needs to be checked over.

    You have mentioned several clauses, such as:

    Retraint of trade (solicitation) - needs to be clear to include during and a short period after employment. If you expect them to be self-employed you cannot do this.

    Competition (weekend or evening work for competitors or themselves) - this could be difficult if you are expecting them to be self-employed, you cannot control their hours. If you control their hours they could be employees!

    What about tools? bring their own? you provide? etc You need to decide first if their are to be employed or self-employed and then put together some terms you wish to include and then a contract can be drafted.

    I would be happy to do this if you email me direct at [email protected]


    stingray said:
    I run a small plumbing and Heating firm and have decided to switch all employment bar myself to Self Employed and use Subcontractors to reduce the business overheads and for times when work is low.
    Click to expand...
     
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    lawspeed

    lawspeed

    Free Member
    Apr 20, 2005
    93
    1
  • #5
    A 'label' of employment or self-employment is not sufficient, it is not enough for the parties to both intend the relationship to be one of self-employment - the actual working arrangements and contractual terms dictate the status.

    There are various resources available on the issue of employment status, but one should be wary of relying too heavily on generic non-specific guidance, particularly the Inland Revenue's own factsheets.

    We can provide specific advice on your own circumstances and we have a range of contract templates available for use with clients or subcontractors. First and foremost our contracts are designed to protect you commercially but relevant factors for employment status are incorporated.

    Let me know if you would like some information sent through or take a look around our website www.lawspeed.com
     
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    L

    larneylee

  • #6
    Hi,
    Interesting reading Stingrays initial question and the answers too. I recently posted an ad on the site but I am still awaiting some advice. I wonder if someone may be able to through some light on an enquiry I have? I have attached it below.
    Kind regards,
    Lee
    Hello,

    I have been sub contracting to guy that performs a lot of commercial work. We build offices, install kitchens, perform people moves and the list goes on. As a plumber I naturally do his plumbing works and to date we have plumbed in many kicthens without a hitch. However, we installed a kitchen some months ago and disconnected the old kicthen and moved it into another area. The new kicthen has been installed though, the guy whom I contract to has said that the kitchen and the water vending machines have been connected to the wrong cold water pipe. I know this might become more of a technical issue and I hope someone may be able to shed some light on things. Now, I connected the kitchen plumbing into the adjoining bathroom hot and cold water supplies. It now appears that the old kitchen was connected to a separate water system from a tank. The issue is that tank fed water is supplying the kitchen.

    Now, there were no signs in the adjoining toilets saying do not drink the water and been a commercial environment I was not able to tell what water supply was for where.

    My question is this. As a sub contractor, am I liable at all for this mistake? My knowledge tells me that the guy whom I contract through, in his planning meeting should have either asked or should have been told that there were two water supplys by the facilities person, who in turn should have liased with the building management people. I was contracted in to install the plumbing and I was not made aware of anything that warranted my attention.

    I have plumbed quite a few kicthens in and all the vending machines to date and they have all been on cold mains water. Though I also worked closely with the facilities manager at the time who I am sure would have told me about any areas that required my attention.

    I hope someone may be able to shed some light for me?

    Thank you
     
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    Jezclayton

    Jezclayton

    Free Member
    Mar 2, 2008
    545
    68
    Berkshire
  • #7
    Larneylee

    You have offered your services as the plumbing "expert". You have charged to install the plumbing on this contract. Your installation does not comply with the Water Fittings Regulations and it would appear the end users have become aware that you are delivering non-potable water to their drinking outlets. They are probably non too pleased. You need to remedy the situation fast and stop looking to apportion blame.

    If you want to call yourself a plumber, don't blame everyone else when you drop a bo***ck.;)
     
    Upvote 0
    S

    sharon B

  • #8
    annethedonn said:
    Hi Stingray

    My solicitor drew up an agreement between mycompany and contractors - I can send you a copy of what he's done if you want to modify it - a bit cheaper than what it cost me!!! Sub-contractors usually means that the contractors employ contractors on their behalf. As Alan states, you need to prove to the IR that they are self employed, ie you don't pay their wages & NI. Getting them to work on a per job basis, rather than hourly would help. If you want anymore info, just let me know as I've been through this already.
    Click to expand...
    Hi, i was looking for some imformation regards the sub-contractors contracts and the imformation you have listed was very usefull, i dont suppose you could send me a copy of the aggreement as i am stumped on the correct wording,
    Kind Regards, Sharon.
     
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