ESM8475 | Opinions on contracts: obtaining further information - third party contracts

Before you can give an opinion on a contract, you may need to see a third party contract. This is most likely to be the case where the contract has been obtained through an agency. In such cases, as well as there being a contract between the service company and the agency there will be a contract between the agency and the client.

You may need to see the contract between the client and the agency where the service company contract does not appear to be comprehensive, is couched only in very general terms or you are concerned about some of the clauses in it. In the latter case this may be because you want to confirm the position regarding a right of substitution.

In such cases you should ask the worker to provide you with a copy of the contract between the third parties before giving an opinion. The service company will not be a party to the third party contract and may not have a copy of that contract, or access to a copy. If so then you should ask for the worker to arrange for a copy of the contract to be sent to you. Alternatively, you may ask for authority to approach the client or agency in order to obtain a copy of the contract.

Where the worker refuses to co-operate by arranging for a copy of the third party contract to be provided you should inform him or her that you will not be able to provide an opinion on the engagement.

The third party contracts are what govern the relationship between the client and the agency. They are often lengthy commercial documents and many of the clauses will not be relevant to determining the employment status under IR35. Sight of the third party contract is, therefore, not always going to add much to the overall picture.

The worker does not normally have access to the third party agreement since he or she is not a party to it. If the service company defaults on its agreement, then the agency is liable to the client and not the worker. In order to protect the agency’s interests you would expect any relevant terms and conditions to be reflected in the contract between the service company and the agency. For example, if the client wants to be able to control the worker and stipulates this in the agreement with the worker you would expect the agency would want to make sure this was included in the contract with the service company.

Whilst it is preferable to have a full picture of the full range of contracts it is not always essential to see the third party contract. If you are unable to obtain sight of the third party agreement then you should base any opinion on the information provided by the worker about what he/she understands to be the full terms and conditions of the working relationship.