Contractors' Questions: Notice period - is my agent acting legally?
Contractor's Question:I see more and more that agencies are putting into contracts a one-sided termination clause. For example, they can terminate the contract at any time, but the supplier/contractor cannot terminate the contract. Is this legal?
Expert's Answer: I recommend that you consider the following:
* There is no (legal) reason why notice periods should be balanced
* Having no notice agency-contractor is not just helpful but generally accepted as necessary from IR35 viewpoint, to demonstrate lack of mutuality of obligation
* There is no (legal) reason in an opted-out contract why the contractor should have a right to terminate on notice, but from a commercial viewpoint the contractor should (I suggest) always insist on such a right, together with a right to terminate without notice in the event of breach by or insolvency of the agency
* In a not opted-out contract, no rights by the contractor to terminate on notice is probably a breach of agency regulation 6 (not a lot of people realise that), and so the actual legal position may well be that such a contractor has a legal right independent of the contract to terminate without notice at any time (BUT should seek competent advice first!)
* It's sad that so many agencies put a 'terminate on insolvency of contractor' provision in their contracts – and overlook the facts that (a) it's the agency who's paying, and so the agency's solvency is more of an issue than the contractor's; and (b) probably considerably more agencies go bust (i.e. insolvent) than contractors!
The expert was Roger Sinclair, legal consultant at Egos Ltd , a contract and commercial law specialist.
Editor's Note: Related Reading -
Notice periods and 'How will I know if I am caught by IR35?'
Contractors' Questions: Can I reduce my contract notice period?
