Susan's Wole's Legal Bits

In September 2009 Susan Wole was interested in answering the question.....

....'Can you sign that contract?'

Hi all,

This month I promise I'm not on holiday or taking it easy, it's just that my esteemed colleague Wole - our in-house lawyer - has suggested he speak to you all about an important topic that's been on his mind.

I have therefore happily given my monthly blog space to him and am delighted to welcome Wole to the website.

As always please contact me through the blog if you need any help with anything in the HR arena!

Susan

On a regular basis in the course of my job as Contracts Manager with Gabem Management Limited, I deal with various cases of workers making the mistake of personally signing contracts purportedly meant to govern their time on assignments with whomsoever they find work with. It is actually the case that a Gabem member, either as a PAYE umbrella company worker or as a self-employed individual, has no authority to sign contracts that would legally be binding on Gabem (our reasons for this I will explain later). If it is the case that you have made this mistake in the past or are just about to do so you should know that the effect of such a contract signed (without authority) is to legally bind the individual in his personal capacity to the terms of the contract and the consequences could be far-reaching.

In order to give you a better view of the appropriate contractual arrangement that governs your assignment I will deal with three questions frequently asked by workers within the context of this topic. The questions in sequence are: "Why is it wrong for me to be personally bound to the contract for my assignment after all am I not the one providing the services"? "I thought that the arrangement with Gabem was that I would conclude contract with whomever I found a job with and Gabem would just come in at the point of receiving payment?" "If I have no authority to sign contracts for my assignments, how do I know what you are signing me up to?"

If you are a Gabem PAYE umbrella worker, you are legally an employee of Gabem and technically your services are being supplied by Gabem to the end client on each occasion when you find work. Whenever you have an assignment, Gabem will enter into contract with the agency/company to whom you will be providing service. The terms, conditions and obligations under the contract are for Gabem to administer. As an employee you should not be at risk of liabilities pursuant to the agreement made by your employers under the contract, any more than me being liable for the exposure of Gabem under agreements Gabem makes with third parties. One key advantage that you derive from working through a limited liability umbrella company is that the company will contract with the agency/company you found work with and in case any dispute arises under that contract, Gabem will, depending on the nature of the dispute, deal. However this benefit would be side-stepped if you were to sign a contract for your assignment in your personal capacity. As ignorance is no excuse in law, if you make an error of judgment by signing a contract for your assignment without authority and things eventually go wrong the contract will be personally binding on you and you would bear the obligations, warranty and liabilities under the contract howsoever unfavourable they may be. Have you got the required insurances to cover any claim that may arise under the contract in such situation? Probably not. It is therefore sensible not to unnecessarily expose yourself to severe legal consequences under contracts.

If you are a self-employed individual, the contractual arrangement is that Gabem technically enters into agreement with the agency/company for which you are working and in turn sub-contracts the work to you on the same terms as Gabem has agreed with the agency/company. Obviously Gabem would have negotiated a fair contract with the agency/company which you may not be in a position to do.

Either as a PAYE umbrella worker or self-employed individual, you can be rest assured that Gabem acts in your best interest while entering into contracts with agency/company for your assignments. In this regard, we will ensure that the basic terms you agreed with agency/company (i.e. rates, worksite, duration of assignment, notice period to terminate and invoicing frequency, just to mention a few) are sacrosanct. Remember that either you or the agency/company would have previously notified Gabem of these basic terms. Not only will we ensure that these terms are correctly reflected in the contractual documents, we will, as soon as we conclude the process of contract documentation, send you a SMS confirming the basic terms we have agreed with the agency/company. You can then query these terms if they are different from what you agreed with the agency/company.

Apart from the tax benefit you derive from working through Gabem either as a PAYE umbrella worker or self-employed individual, you also have the benefit of working under contractual terms that are fair to all parties. I hasten to make this assertion because Gabem checks small prints with a fine-toothed comb and ensure that it is safe to enter into contracts before signing contracts for your assignments. Where we have concern that a clause in a contract potentially exposes you to undue risk, we enter into shrewd negotiation with the client/agency and strike a reasonable compromise. I reckon you will agree that an agency/company will not be open to negotiating contractual terms with an individual.

What then should you be doing when you receive contracts from an agency/company for your next assignment? The answer is simple: send such contracts to Gabem and our Contracts Department will deal as appropriate. If a contract is boring and at the same time risky, shouldn't you rather leave that to those who are well trained and capable of dealing with it in our Contracts Department? I can now see that you have made a quality decision to act cautiously whenever you are asked to sign the next contract and I welcome communication with anyone interested further in discussing this issue with me.

Wole

If you have any questions or comments about Wole's post please you can get in touch by clicking Susan's name below, alternatively feel free to just give us a call!

To give Susan your suggestions and comments you can get in touch with her here.

All comments provided on my blog are for informational purposes only. My thoughts and opinions are my own with agreement from my employer as being suitable for sharing with the wider world. Any advice, or writing that might be taken as advice, should not be deemed in any way as professional Legal advice and are only the musings of a HR practioner whose sole aim is to help where she can.