We are working on an Option E Contract. The Employer has asked to change the fee percentage claimed for PM and his team as they are self employed. They say that they are a Subcontractor and should have subcontract fee percentage applied and not direct fee. Under 11.2 (17) they provide a service but in the SOCC they come under 14 as not directly employed but working for the Contractor. I deem Subcontractors providing a service to be a designer for example.
This issue has caused much debate previously and I am sure will continue to do so.
Steven C Evans wrote an interesting article on this subject which can be found at the following link;
The difficulty is that a Subcontractor may be a person who is contracted to ‘provide a service necessary to Provide the Works’. The definition of Provide the Works includes ‘incidental work, services and actions which the contract requires’. Conversely you have also referred to s14 of the SCC, whereby they are treated as People. Both seem to apply.
I would suggest considering the following;
- whether they are required to exclusively work in the Working Areas,
- what form of contract are they engaged under,
- what is the description of the services to be provided,
- are people named or is there a ‘category’ people requirement (substitution),
- what is the corresponding payment mechanism.
Although not conclusive, consideration of these points may help to point towards one or other of the options.