About to be a contractor - doubts about contract

akesha

Hi all,

this would be my first job as contractor, and I have some doubts.

I have found the job through a recruitment company, and the contract is with them instead with the client. Is this usual? In permanent jobs, I have always signed contracts with clients...

There is a clause in the contract that says that I can't work directly or indirectly with the client until 18 months after ending the contract unless it is through them. If I do so, they wanted me to pay an amount. Is this normal thing? 18 months seems too much to me.

Here there is a clause, in which I understand that if the client sues the recruitment company because of me, I am liable to pay up to 2 million euro to them ???

The Sub-contractor agrees to defend, indemnify and hold harmless XXXX and any associated company (including parent companies), their officers, directors and agents from and against any claims, actions, demands, losses, costs and damages (whether arising during the Term or following the termination of this Contract and including without limitation, reasonable legal and accounting fees) arising or resulting from the Sub-contractor’s breach of any term of this Agreement or resulting from any claims, actions, demands, losses, costs and damages incurred or taken by XXXXX's Client against XXXXX up to an amount of €2 million.

And what does this paragraph mean exactly? That I can't ask for VAT?

The fees referred to in this clause are exclusive of value added tax (VAT) which shall be payable by XXXXX at the appropriate rate for the time being in force on the production of an appropriate value added tax certificate

Thanks!

Stheno

For your first couple of queries, yes those are all normal.

You would need to get set up with the appropriate insurance

IN relation to the VAT who is XXXX? You or the client company?

akesha

Stheno wrote: »

For your first couple of queries, yes those are all normal.

You would need to get set up with the appropriate insurance

IN relation to the VAT who is XXXX? You or the client company?

XXXX is the recruitment company.

Thanks for quick answer!

davo10

akesha wrote: »

XXXX is the recruitment company.

Thanks for quick answer!

It doesn't mean you have to pay €2m, it means you need indemnity up to €2m. In other words you need insurance that will cover the recruitment agency against a claim for something you have done, up to €2m.

Stheno

akesha wrote: »

XXXX is the recruitment company.

Thanks for quick answer!

Yeah basically what is happening here is if you are being paid a fee of 100 per day by the recruitment company, they have to charge VAT on top of that to the client so they are just being explicit in calling out that your fee is exclusive of the VAT

akesha

Stheno wrote: »

Yeah basically what is happening here is if you are being paid a fee of 100 per day by the recruitment company, they have to charge VAT on top of that to the client so they are just being explicit in calling out that your fee is exclusive of the VAT

Sorry, I still don't understand. So then, can I ask for vat (100 per day plus vat following your example) or not to the recruitment company? They are saying that I can, but I want to be fully sure before signing the contract...

Stheno

akesha wrote: »

Sorry, I still don't understand. So then, can I ask for vat (100 per day plus vat following your example) or not to the recruitment company? They are saying that I can, but I want to be fully sure before signing the contract...

I think you need to talk to the likes of contracting plus/fenero who will explain this to you.

So you invoice the agency for 100 per day.

The agency invoice the company for that 100 per day, but it's liable to VAT which is 23% more, so they invoice the company for 123 per day and pay you 100.

They then pay the 23 VAT to the government as required each month.

There's not real benefit to you to have the VAT assigned to you as it means more work to do the returns, unless you expect to generate significant expenses that you can claim the VAT back on.

akesha

I have my own limited company, but I understand from your last post that I can invoice the recruitment company 100 plus vat, then.

Thanks for all your help

Stheno

akesha wrote: »

I have my own limited company, but I understand from your last post that I can invoice the recruitment company 100 plus vat, then.

Thanks for all your help

You can, but you do understand that that will be a greater overhead on you to do a monthly return on VAT? And you'll have to register for VAT before you can invoice?

akesha

Yes, I already have vat number as well, and I hired an accountant a while ago. I just wanted to be sure, because I heard that sometimes the fee you are getting had the vat already, and 100 with vat and 100 Plus vat are quite different

Thanks again!!

Stheno

akesha wrote: »

Yes, I already have vat number as well, and I hired an accountant a while ago. I just wanted to be sure, because I heard that sometimes the fee you are getting had the vat already, and 100 with vat and 100 Plus vat are quite different

Thanks again!!

No worries, best of luck with it

xabi

You'll be invoicing the recruitment agency your daily rate plus VAT.

akesha

Just one more question, about the insurance... I don´t have one, but if my company is LTD, it doesn´t affect me, right? It only affects the company?

Jim2007

akesha wrote: »

Just one more question, about the insurance... I don´t have one, but if my company is LTD, it doesn´t affect me, right? It only affects the company?

Well first of all the clause is a load of BS!  The reality is that no one is their right mind is going to come after you, if only because they know very well that not only will they be with out the €2m, but the costs as well because it is unlikely you can afford to pay them.  That type of clause has been in every contract I've signed in the last 30 years and I've yet to hear of a single situation where it has been activated against a contractor.  So I would not loose any sleep over it.
The second thing is that just because you are operating via a limited company does not mean that you cannot be held personally liable for your actions.  Courts can and have raised the vail of incorporation and make people liable for their actions when they have acted recklessly and relied on the company to avoid it.  So it is not a get out of jail free card by any means.