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Right of Substitution
One of the fundamental requirements of employment is an obligation on behalf of the employee to provide a personal service. If as a contractor you have the contractual right to send a suitable substitute to the client in your absence then you are not obligated to provide a personal service. This therefore may be seen as a fairly strong indicator towards self employment.It is very important to ensure that there is a suitable right of substitution clause in any contract agreed as it is one of the key points the HM Revenue and Customs would assess in any IR35 Investigation.
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Contract Terms and Conditions
It is very important to have a realistic and genuine Right of Substitution clause in any contract terms and conditions and for it to be in context with any other clauses.Firstly, it is important to actually be able to provide a substitute if ever required. You should identify a number of fellow contractors with similar skill sets who could be provided if the need arose. If the service being delivered is so niche that only you as sole contractor are suitable to deliver the service there is no point having a substitution clause in the contract as there is no possibility of it actually ever being used. The clause could be seen as artificial if inserted when not required.
The substitution clause should also not be too restrictive. It could once again be seen as artificial if it were to be written so restrictively that it could never realistically be used.
The Right of Substitution and Control
Care should be taken when wording the Right of Substitution clause to ensure that it does not negatively affect other things such as the right of control. If the client has too much control over the substitution process it may be claimed that the client is looking to recruit another employee.The power to decide upon the worker to be provided should be held with the contractor rather than the client.
