Agency witholding money, invalid opt out.

[mr_woo]

Worked for an agency for 3 years. After 3 years client put workstream out to tendor and another agency won, therefore original agency could no longer offer contract and so had little choice but to switch to new agency.

Contract with original agency had a 6 month restriction for working with the client as well as a clause enabling them to off-set any money owed by me to them against my last invoice.
They then withheld approx £3k for loss of margin.

Now, I pointed out that they had no loss of margin as they were unable to offer me a contract but to no avail.

I then looked at the opt-out they requested me to do from employment regs 2003 and noted the following:

When I joined I used an umbrella and went Ltd over a year later. I was asked to opt out when I formed the ltd. Therefore although I signed it, I believe it's invalid and sent the agency the following:

I pointed out to you last week the "opt-out" of the GUIDANCE ON THE CONDUCT OF EMPLOYMENT AGENCIES AND EMPLOYMENT BUSINESSES
REGULATIONS 2003 was not carried out in a valid way. I was asked to opt-out 15 months after I commenced work and as you can see from the regulations below 32(9) this is indeed invalid and as such I am opted in to the regulations.

Please note 6(1) prevents you from making any deductions

Regulation 32(9) provides that limited companies and those persons whose services they supply can choose not to be covered by the provisions of these Regulations. If they do exercise the choice not to be
covered by the Regulations, then both the limited company and the worker to be supplied must give notice, to the employment agency or employment business that this is the case, before they are either
introduced or supplied to a hirer

Regulation 6(1) prevents employment agencies and employment businesses from taking any detrimental action or including restrictive terms in work-seekers’ contracts, which prevent them from either:

(a) i) terminating their contract with the employment agency orbusiness;

ii) working for others such as the client directly or through a competing employment business; or

(b) which require the work-seeker to notify them, or any person connected with them, of the identity of any future employer.
It is important to remember, when applying regulation 6(1)(a)(ii), that the term “work-seeker” includes limited company contractors and persons supplied through limited company contractors that have not given notice
to opt out of the Regulations. This is as a result of the provisions of regulation 32(3), which specifically extends the definition of work-seeker to limited company contractors (which have not opted out of the
Regulations) in these circumstances. Therefore the agency or employment business may not restrict either the person supplied by a limited company, or the limited company itself from terminating the
contract with it and taking up work with a person other than it or the limited company itself.

Neither can an agency or employment business, under regulation 6(1),subject, or threaten to subject, a work-seeker that has lawfully terminated any contract with it, or given notice to do so to a detriment. An example
of a detriment would be withholding payment or deducting a proportion of the hourly rate for any period already worked.

They have still not paid me and don't reply to any of my corrospondance. I am looking at county court as the next option.

[jmo21]

Payontime might be faster?

[mr_woo]

Payontime might be faster?

already tried it.

[rootsnall]

already tried it.

Are you in the PCG ? The standard legal helpline probably won't be much use but I managed to get through to someone more knowledgeable by pestering.

I think you could be risking it by paying the Co Court fees as the 6 month clause could in theory be enforceable. The agency regs stuff is pretty wishy washy and you signed the opt out so it is not nailed on you would win. It is a matter of weighing up the odds and how much you stand to gain. Sometimes it is better to move on !?

There is a body who police the agency regs so maybe try them and report the agency.

[mavster07]

I'm not sure that the 6 month clause is actually valid in any case. That clause really is intended to prevent you from seeking work with the client to the detriment of themselves (i.e. taking work away from them). Because you're not, as you pointed out quite rightly. then the clause becomes mute.

Because they effectively ended the contract, they can't enforce upon you how and when you seek services, as you are not competing with them for the work, its the new provider that is competing. You have no direct tie in to the end client, which is what such clauses are intended to prevent.

In effect, its a restraint of trade and unenforceable.

My suggestion would be that you issue them with a full invoice, and for what isn't paid pursue it as a bad debt and take it through small claims court.

I would also inform the agency that you are reporting them to the relevant regulatory body (e.g APSCO, REC, etc) with a view to reporting them for breaching the code of conduct.

In the meantime, pursue them as a bad debtor and get what is owing to you because no agency can withhold monies owed for work completed.

Finally, you could also inform the client of the problem and see whether they can resolve it for you - because if they've paid the agency for that time you have worked, legally, that money (or whatever you bill at) is yours, not the agency's.


This is just the agency being greedy and screwing the contractor even though they lost the contract with the client. Its not the done thing and should be stomped on. I would name and shame them here...

[Wanderer]

restraint of trade and unenforceable.

take it through small claims court.

report them to the relevant regulatory body (e.g APSCO, REC, etc)

name and shame them here...

100% agree with what mavster07 said above.

Plus you can claim that this is a penalty in a civil contract which is not valid. However, the agency aren't going to answer you, they have their money so now they just ignore you till you give up.

You can find solicitors online who, for about £3, will send the agency a "letter before action" which gives them 14 days to pay up or face court action. Send it "signed for" to the director of the agency.

Then take it to small claims court, check out https://www.moneyclaim.gov.uk/web/mcol/welcome.

Don't forget to add penalties and interest for late payments.

It's pretty rude that after 3 years of working through this agency they have screwed you this badly. It just goes to show what a nasty bunch they are.

Name and shame, I say. DON'T let them get away with it.

Oh and one thing - why did you opt-out?

[TykeMerc]

As the others have said you should go for the throat on this one, it's the agents fault that they're no longer on the suppliers preferred list so they can't claim loss of trade.

Get the demands in and go to small claims court. Don't argue the matter just send a notice of action then a summons, very easy to do.

Opt out is irrelevant and odds are you weren't asked to sign one prior to client introduction in the first place so it's never been valid.

[Justin]

Pre Action Protocols

The restriction covenant will not be enforceable. You are not attempting to cut the agent out of the arrangement. The opt out is also invalid.

Step 1: Credit collection - you've done that and they ignored.
Step 2: Letter Before Action. They will probably ignore.
Step 3: Letter Before Intended Proceedings. Make sure you follow the pre action protocols.
Step 4: Money Claim online.
Step 5: Court. You will win.

Make sure you follow the Pre Action protocols as per the manuals on MoneyClaim online. Make it clear to the agency that you are doing this, and expect them to do the same. Judges want to see that both parties have followed the correct process and attempted to avoid court. You could also suggest arbitration.

If the agency ignore all that they are fools. The judge will hammer them even more than they probably will anyway.

At any point the client will be able to offer to settle (before it goes to court). They may try to settle for £3K, which you can refuse. You should increase the number to take account of the extra costs you've incurred. Say another £500. If they do try to settle then take that as an indication that you have them by the short and curlies.

I'd suggest you get a lawyer involved to guide you on this one. Getting the process right is important.

[RichardCranium]

Worked for an agency for 3 years. After 3 years client put workstream out to tendor and another agency won, therefore original agency could no longer offer contract and so had little choice but to switch to new agency.

What correspondence occurred between you and the AgencyOne at this time?

You had a contract with AgencyOne, not ClientCo. ClientCo's actions do not directly affect that contract. I suspect what should have happened - and was expected by AgencyOne - was that AgencyTwo would be injected between ClientCo and AgencyOne, thus:

You --> Your Ltdco --> AgencyOne --> ClientCo

becomes

You --> Your LtdCo --> AgencyOne --> AgencyTwo --> ClientCo

The more I think about this, the more I think you've stitched up AgencyOne by assuming you could just ignore the fact you actually had a contract with them.

Your contract with AgencyOne is not the same contract as the contract AgencyOne had with ClientCo. If ClientCo has a sole supplier arrangement in place for resources, then the AgencyOne / ClientCo contract may have even stipulated what would happen in these circumstances.

[VectraMan]

Because they effectively ended the contract, they can't enforce upon you how and when you seek services, as you are not competing with them for the work, its the new provider that is competing. You have no direct tie in to the end client, which is what such clauses are intended to prevent.

If that were true, then any of us could circumvent the restriction and go direct by the client refusing to deal with the agent. The agent puts the clause there to protect their business, i.e. if the client wants you they have to use the same agent. If the client refuses to deal with that agent, then that means they can't have you. At least that's the intent of the contract that you've signed. There's unquestionably a loss of trade if you continue via another agent.

If you don't like the terms, don't sign the contract. I would say if £3K is the penalty for getting another 6 months work, then that's not unreasonable and most of us would probably accept that deal.