SVA Forum

Strictly Admin · Joined: 09 May 2007 Posts: 35

Does anyone use freelancers or sub-contractors when they have a large amount of work in? I have two possible new contracts which means I may have a work overflow and I am unsure on the legal aspects of this at the moment.

If you do this could you give me some pointers please, and also do you ask them to sign a confidentiality agreement so they don't go directly to your clients?
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Sally@Stonetext · Posted: Wed Apr 30, 2008 1:11 pm Post subject:

I think Caroline has something up her sleeve for sub-contractors that will be going on the Sales pages but not sure what stage she's at with this. Do a search (see top of page) for contracts and sub-contractors and you should get something useful.

Working with other VAs is all about trust so I think you should try to build relationships with a variety of VAs with different skills. Obviously they also need to be able to do the work too!! I wouldn't leave it until the last minute to work out who you would like to work with. I know it sounds daft but outsource some current work (or at least part of it) that will be similar to the contracts you have coming up. See how sub-contractors handle it and how accurate they are.
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caroline · Posted: Wed Apr 30, 2008 1:59 pm Post subject:

Oh yes - I do!

We now have a comprehensive subcontract covering all sorts of thorny issues.... I'd mirror what Sally says - we do quite a lot of outsourcing and some of the stuff we get back is just dire and other times it's so good I question whether I should ever do any typing myself!!! LOL!

Anyway - here's the link:
http://store.payloadz.com/go?id=130638

As ever get a lawyer to check it over before you use it, as your subcontractor should too. Having this as a template though will save you about 10 hours in the lawyers billing schedule tho!
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Kate · Joined: 22 Sep 2007 Posts: 21 Location: Brighton, UK

Hi Caroline

I've just recently been exploring this issue as my business is at the stage where I am wanting to work with associates to expand.

I didn't check here first (opps) and sent an email to another business network of mine and spoke with a lawyer specialising in contract law.

She raised an issue (of which formerly I was unware) that government legislation has changed within the last 18 months to regulate "agency" workers.

The upshot is that, in this lawyers opinion, VAs who work with associates who then supply VA services directly to clients would be considered to be "agencies". This in turn means the associate VAs are thus deemed "employees" of the "agency" and the "agency" is liable for PAYE for each associate (even if it is only part of their work and they have a stand alone VA business themselves!)

Aparently, the only way to avoid this if if both the VA business originating the work and the associate are set up as limited companies and the agreement is between the two companies.

Can you let me know if this is dealt with in your "Associate/sub-contractor agreement", and, in any case if you or anyone else is aware of this legislation which could have a massive impact on expanding VA businesses?!
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sara - Office Bird · Posted: Tue Aug 12, 2008 1:08 pm Post subject:

Wow! This could be a huge problem!

I think the issue here is the line between being self employed or employed. I am sure that if I do a couple of hours typing as a VA then that doesn't constitute as employment.

If a VA passed me onto a client then I can see how the agency thing gets tricky but in my experience this isn't what happens. If a VA1 wants a task doing then they enter into a contract with the associate VA2. This means that VA1 is a client of VA2 in the same way as any other client. It doesn't matter that VA1 is then going to check the work, add a mark up and forward to thier client.

When you work for an agency you get introduced to the client and work directly with them. I think in the majority of cases it is different for VA's.

This would not apply to Associate VA's who basically get handed the client to become a full PA to them as this would be a little bit like agency staffing. An easy way around this would surely be to pass the client to the associate VA in it's entirity and then the associate VA can give the original VA commission on every invoice (to the same value the mark up would have been). I'm sure you could put contracts together to say any future work from the client went back to the original VA.

This is only my take on things and I will be reading closely to the opinions of others. This could be HUGE for the VA industry as a whole. Thanks for letting us know.
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caroline · Posted: Tue Aug 12, 2008 2:07 pm Post subject:

The contract very clearly states that there are two distinct businesses and that the subcontractor is self-employed.

There are a number of things which will be taken into consideration when assessing whether someone is employed / self-employed and this includes what equipment they are using, whether they only work exclusively for you, and crucially whether they are able to turn work down or not.

This contract was designed with the new legislation in mind as we didn't want it either to be classified as a contract of employment or as unenforcable under fair trading laws.

Hope this helps!
C.
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Kate · Joined: 22 Sep 2007 Posts: 21 Location: Brighton, UK

Hi Sara and Caroline

Thanks for your replies! Caroline it looks like everything is covered if you sub-contractor agreement was written to be compliant with the legislation.

I have one more question: my accountant has also talked about managed service companies (MSCs). He has forwarded the following links below (the first a short article, the second a link to download a 48 page document!)

http://www.bytestart.co.uk/content/contractors/msc/hmrc-msc-guidance.shtml

http://www.hmrc.gov.uk/employment-status/msc-guidance-july07.pdf

I'm sure this is all covered, but just wanted to check before I buy the agreement through your link.

Thanks again.

Kate
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Pier to Peer Coaching

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