We recently conducted a LinkedIn survey on Statement of Works. Before I talk about what it is, it’s very interesting to see that so many people haven’t heard of it!
Here are the results from the survey:
- Yes, I’ve heard of it – 28%
- Yes, I’ve worked on SOW – 30%
- No, never heard of it – 41%
- Other (please comment) – 1%…. there’s always that 1%!
Am I inside IR35?
First of all, let me say what it isn’t – it isn’t just a way around IR35! However, contractors are working, so exactly the same rules apply in terms of how we assess and classify off-payroll contracts.
When applied properly, it does make the definition of what’s inside or outside of IR35 clearer. In essence a SOW contract brings in much more definition for staff to use on a project, therefore in theory removing the IR35 grey areas.
What does it actually mean?
For the 41% who haven’t heard of it, and the 28% that have but may not know much about it, and potentially for the other 1% , let me try and spell out what it means.
In essence, a Statement of Works in this context is a contract that clearly spells out what is expected to be delivered from a project or service. I will detail a list of areas that contracts should cover and you’ll find a full example below, but the key areas are; timescales, outputs, deliverables and milestones. So rather than just bringing in one or a number of contractors to do ‘something’, you are creating a specific contract around what is to be delivered.
For the client, this means much more structure and control around outputs and cost. It’s a way to get the advantages of using a more traditional consultancy firm, with potentially more experienced staff and at a lower cost.
For a contractor working on the SOW, it means having a much clearer set of deliverables and often (but not always) the definition of the work means that it is therefore appropriate to use a professional services company (or Ltd Co).
A SOW Framework
There is additional admin involved. Detailed below is a simplified breakdown of what needs to be covered, but for a true SOW contract there should be a thorough document that is legally binding on both sides.
It’s important to remember that a SOW in this context, is the recruitment/consultancy business agreeing to deliver a project, program or service for a client. We then use consultants to deliver that work.
The best way to use a SOW when looking at staffing is to use it appropriately and as a tool in the process of recruitment. Lots of options are on the table for hiring; permanent, FTC, temp/contract PAYE (inside IR35), interim outside IR35 and SOW. Understanding the different options and when to use them is key to maximising your greatest asset
This is all designed to be bitesize information. Personally I think it’s an exciting way to look at delivering projects with highly experienced professionals at a fraction of the cost of using a consultancy.
I’m trained and experienced in delivering SOW, so if you have any questions or want to explore SOW further then please do get in touch with Steve Clarke at firstname.lastname@example.org
What should be covered in a SOW
summary of consultancy required and expected outputs:
- Project Structure
- Review Dates
- Expected Outputs
- Acceptance Criteria
- Employment Business Key Contact
- Contractor Key Contact
- Change Control