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Let’s leave notice periods for the permies. We don’t need them!

Let’s leave notice periods for the permies. We don’t need them!

Last week I got into one of those elliptical conversations you sometimes have on the internet. It started off with one of those all-to-frequent questions, “My new contract hasn’t got a notice period! What am I going to do?” Silly question: “Earn a lot of money while you finish the gig” was my response.

This, apparently, was the wrong answer. Heigh ho…

And this is where it started to get confusing. The main thrust was that if I have a notice period and the contract is terminated early, I’ll get paid for not having to do any work. Which is a good thing, yes?

No, I said, it isn’t.

Then someone else chimed in with a tale of being terminated early and having to threaten legal action to get his notice period paid. Unsuccessfully, it transpired, but let’s not spoil the argument with reality.

OK, so let’s explore this a little more deeply.

One of the three major planks of a solid IR35 defence is to have the minimum level of Mutuality of Obligation between you and the client, the other two being a lack of Direction and Control and a Right of Substitution. Which we all know already of course.

But a minimum of mutuality, put simply, means that they don’t have to offer you work, you don’t have to take it and they don’t have to pay you if there’s no work to do. Like, for example, when the job is done and they don’t need you any more. At which point they would rather like you to go away and stop costing them money because you are a contractor and that’s why they hired you/

So if you insist on being paid for working when there is no work to do, aren’t you now demonstrating something rather more than the irreducible minimum set by case law? This rather blows a hole in your IR35 defence, unless you can demonstrate an absolute lack of Direction and Control and even then your case is seriously weakened.

There is, needless to say, a second thread to this debate. What if you want to leave the contract early? Something I’ve never done myself, but there can be good reasons for it (and, let it be said, some very pathetically amateurish ones) If you have a notice period, then you can exit gracefully stage left simply by giving the stated notice. You probably won’t be that popular, but it’s not wrong to exercise your contractual rights. However, if you haven’t got a notice period, then you are stuck there for life, or something, with no hope of escape. At which point I might ask why the hell you signed the contract in the first place, if it’s that important, but I digress.

You can always leave a contract. The process is called “negotiation” or, if you’ve really been paying attention, “Substitution”. Either will work, it will be a very strange manager who wants to force someone to stay who clearly doesn’t want to be there.

So argument settled. You don’t need or want a notice period. Ermm, no, apparently. “I got terminated early and I have a four week notice period so I want paying for it” was the refrain. Isn’t this where we came in…?

OK, so even if we ignore the Mutuality argument, you’re still missing a couple of key details. Firstly, your contract will almost certainly have something along the lines of payment being conditional on a signed timesheet or some other authorised evidence of work done. If you’re not working, you won’t have one, so no payment is owed.

Secondly the contract will also contain a clause to the effect that the client or the agency can terminate the contract with no notice at their absolute discretion. And that rather buggers the whole debate, doesn’t it?

The net result of all this is that while it’s a nice to have, and it’s an even nicer to have honoured, notice periods in freelance contracts are not only pointless, they may well be expensive. So let’s leave them for the permies. We don’t need them.

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: pointless first iPad/iPhone test app by mac morrison

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