THE FREELANCER’S COUCH
Seb Maley, Qdos CEO, offers some guidance to this reader’s question, which tackles the very topical subject of how freelancers can arrange for their replacement when they take a much-deserved holiday
Q: I am a limited company freelancer and want to arrange coverage for when I go on holiday this summer. I have found a reputable freelancer to help me out. What do I need to consider when I put another freelancer forward to cover part of my work on a project when I am away? Also, could we make reciprocal agreements when they need someone to cover them on holiday?
A: First and foremost, you need to be certain that your contract allows you to provide a replacement while you’re on holiday. This is known as holding the right of substitution, which incidentally is a key, albeit not a definitive sign of a contract which belongs outside IR35.
Assuming that your client is comfortable with you subbing in another contractor, the next step is to make sure that the proposed contractor can deliver the service to the expected standard. Often, when a contract allows for substitution, it’s only accepted by the client if the substitute is qualified to do the job and, in theory, that it won’t impact the level of service.
Working off the basis that you have a ready-made substitute, it’s important that your business is responsible for paying them – not the client. In several recent high-profile IR35 cases, the contractor’s substitution clause wasn’t considered legitimate because the client sourced, arranged and paid them, rather than the contractor.
It’s also worth documenting that your right of substitution has been exercised, whether that’s by keeping email threads or any other information between yourself and the client that confirms it. In the event of an IR35 investigation, this could prove key in evidencing that your contract includes substitution and that you belong outside IR35.
Finally, with regards to returning the favour and being the substitute for another contractor, assuming that their contract allows for this, it shouldn’t be a problem. But again, when it comes to invoicing, you should invoice the contractor’s business, not the client.
So to summarise, substitution, when arranged properly, is not only a powerful indicator of an outside IR35 contract but an important mechanism to allow contractors some deserved time off without sacrificing that contract.
