Substitution not the main issue It is not correct to say that the Dragonfly case was lost because the substitution clause did not work. The main issue was supervision and control - he was controlled on a day to day basis like an employee. It was control that got him into the 'disguised employee' hole. An effective substitution clause could have got him out of that hole but not having an effective substitution clause does not, of itself, make you a disguised employee.
If you are advising clients on IR35 you need to stress that it is supervision and control that tends to create the main problems. Contracting on the basis that you are supplying a skill set for a period of time for the end client to use as they see fit is not good news.
This case also confirms that merely having a right of substitution clause in the contract between the intermediary and the agency is not enough. It is unlikely to be accepted at face value in the absence of a matching right in the contract between the agency and the end client, or unless there is clear evidence - written or verbal - that someone in an appropriate position within the client confirms that the right to substitute existed and was accepted by the client.
My answers
Substitution not the main issue
It is not correct to say that the Dragonfly case was lost because the substitution clause did not work. The main issue was supervision and control - he was controlled on a day to day basis like an employee. It was control that got him into the 'disguised employee' hole.
An effective substitution clause could have got him out of that hole but not having an effective substitution clause does not, of itself, make you a disguised employee.
If you are advising clients on IR35 you need to stress that it is supervision and control that tends to create the main problems. Contracting on the basis that you are supplying a skill set for a period of time for the end client to use as they see fit is not good news.
This case also confirms that merely having a right of substitution clause in the contract between the intermediary and the agency is not enough. It is unlikely to be accepted at face value in the absence of a matching right in the contract between the agency and the end client, or unless there is clear evidence - written or verbal - that someone in an appropriate position within the client confirms that the right to substitute existed and was accepted by the client.