7 ms·

The important caveat that is that in many jurisdictions, there’s a significant difference in the tax treatment of contractors vs. employees, and so by producing

The important caveat that is that in many jurisdictions, there’s a significant difference in the tax treatment of contractors vs. employees, and so by producing such a contract (that forbids subcontracting) you are plausibly creating an employment arrangement and are on the hook for tax consequences. Here in the UK, for example, if you wrote such a contract, it would be enforceable… but you would be considered (by the tax authority) to be trying to evade employment taxes, and hit with something starting in the range of a low 5-figure financial consequence (assuming the contract was a few months at current average rate for tech workers). All of my contracts explicitly allow subcontracting in order to comply with tax law.

hn_throwaway_99 4y ago
> you are plausibly creating an employment arrangement and are on the hook for tax consequences. I realize this thread is full of armchair lawyers, but that is definitely not the case in the US. Most importantly, there are plenty of valid business reasons to prevent subcontracting that don't have to do with "locus of control" issues that would warrant someone being a full-time employee.
rkangel 4y ago
There is a difference between "allowing it" and "allowing it secretly without your knowledge". There are issues of confidentiality (and potentially NDAs and therefore IP issues) and possibly issues of export depending what you're working on. There's also an issue of 'what you bought' - this isn't necessarily a contractual thing. I work for a consultancy, if we sell you a project based on the skills and knowledge of a few of our experts and then when the project starts we actually staff the project with a few grads, you'd be annoyed right? Very carefully our contracts don't name individuals to allow us flexibility (e.g. someone gets ill, goes on leave etc.) so we're fine legally but you'd be understandably upset and might want to end the contract. [this by the way, is exactly what Accenture does quite a lot]

hn_throwaway_99 4y ago

> you are plausibly creating an employment arrangement and are on the hook for tax consequences. I realize this thread is full of armchair lawyers, but that is definitely not the case in the US. Most importantly, there are plenty of valid business reasons to prevent subcontracting that don't have to do with "locus of control" issues that would warrant someone being a full-time employee.

rkangel 4y ago

There is a difference between "allowing it" and "allowing it secretly without your knowledge". There are issues of confidentiality (and potentially NDAs and therefore IP issues) and possibly issues of export depending what you're working on. There's also an issue of 'what you bought' - this isn't necessarily a contractual thing. I work for a consultancy, if we sell you a project based on the skills and knowledge of a few of our experts and then when the project starts we actually staff the project with a few grads, you'd be annoyed right? Very carefully our contracts don't name individuals to allow us flexibility (e.g. someone gets ill, goes on leave etc.) so we're fine legally but you'd be understandably upset and might want to end the contract. [this by the way, is exactly what Accenture does quite a lot]