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  1. #1
    Ed1
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    Default HELP! 6 month Clause in my Agency Contract restricting me going direct

    Hi,

    I am in the following scenario:

    - I have been contracting, through my limited company, for 2.5 years through same Agency, for the same Employer
    - I sign a rolling 3 month contract every 3 months.
    - My employer is now happy for me to contract direct to them, meaning the Agency will be cut out of the situation, and my employer and I can meet in the middle of the Agency commission, both being better off.
    - My employer has no contractual obligations to the agency, i.e. they will happily stop dealing with the Agency and deal with my limited company direct.

    However I have the following obligation:
    - My most recent 3 month contract has just ended, but has a services clause stating that I cannot now provide "similar services" aka, my job, to my employer for a restricted period of 6 months.
    - My employer will not pay any form of break fee to the Agency that effectively releases me, and my employer wants me to negotiate myself out of any obligation to the Agency for the next contract.

    The situation now is that the Agency does not want to give me a new contract without the restricted services clause, which effectively binds me to the Agency, having them as a middle man in my career ad infinitum.

    My question is, what are my options now?
    - Is there some way I can opt out of the services restriction element of the next contract in any way when I sign?
    - Do I have any rights that mean I break this 6 month restricted services clause?
    - The Agency seems to pay my bills regardless of having the contract signed or not - could I just continue, without signing, then in 6 months tell the agency the 6 month period from when I last signed has passed so I am leaving them?

    Any constructive advice is most greatly appreciated!

    Thanks, Ed.
    Last edited by Ed1; 4th February 2015 at 11:14. Reason: additional information

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    I think you're tied in, so you'll probably have to pay your agency off to get shut of him.

    You can take some legal advice as restriction clauses have limitations and there are cases you can ignore it but I think in this case you can't as the agency is protecting a legitimate interest.
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    Quote Originally Posted by Ed1 View Post
    Hi,

    I am in the following scenario:

    - I have been contracting, through my limited company, for 2.5 years through same Agency, for the same Employer
    - I sign a rolling 3 month contract every 3 months.
    - My employer is now happy for me to contract direct to them, meaning the Agency will be cut out of the situation, and my employer and I can meet in the middle of the Agency commission, both being better off.
    You really need to re-think your attitude as a company and how you work....

    - My employer has no contractual obligations to the agency, i.e. they will happily stop dealing with the Agency and deal with my limited company direct.
    I think you will find this is not true. Just because they are happy to do so it doesn't mean they don't have contractual obligations. Agents are not stupid enough to let them get in to that situation where they can be binned whenever a client fancies. Problem is your contractual obligations with the agent though.......

    However I have the following obligation:
    - My most recent 3 month contract has just ended, but has a services clause stating that I cannot now provide "similar services" aka, my job, to my employer for a restricted period of 6 months.
    - My employer will not pay any form of break fee to the Agency that effectively releases me, and my employer wants me to negotiate myself out of any obligation to the Agency for the next contract.
    Yep, fairly standard handcuff clause. The agent will lose money and therefor it is fair and just so will stand up. You are bang to rights here.

    The situation now is that the Agency does not want to give me a new contract without the restricted services clause, which effectively binds me to the Agency, having them as a middle man in my career ad infinitum.
    For obvious reasons.

    My question is, what are my options now?
    - Is there some way I can opt out of the services restriction element of the next contract in any way when I sign?
    - Do I have any rights that mean I break this 6 month restricted services clause?
    - The Agency seems to pay my bills regardless of having the contract signed or not - could I just continue, without signing, then in 6 months tell the agency the 6 month period from when I last signed has passed so I am leaving them?

    Any constructive advice is most greatly appreciated!

    Thanks, Ed.
    How do you know they pay bills regardless. Are you saying you have worked for them without a contract? That is a pretty stupid thing to do. You did say you sign rolling contracts so how do you know they pay regardless of contract?

    As I see it you have a couple of options...

    Speak to the agent and discuss how much it will cost you to buy out of your contract. I would bet my last dollar it will be a lot more than the extra you would be getting direct.

    Check your opt in/out status. You may be able to get away with just a couple of weeks rather than 6 months if you have done the right thing. Still means being away from client for that period which client will not like.

    Take a 6 month break.

    Just threaten the agency that you are going to walk unless he reduces his cut to the bare minimum ( about 6% depending on how many contractors they have at the client).

    Carry on as you were. Sounds like a cushy gig if you are happy with the rate so why rock the boat?

    BTW You haven't been able to claim travel etc because of the 24 month rule for quite a long time now. Might it be time to go look for a new client and start claiming again? That might get you a better rate overall....

    BTW 2 I hope you are covering your arse re- IR35. It shouldn't matter how long you have been with a client but calling him your employer after 2.5 years certainly sounds like a huge problem to me.
    Last edited by northernladuk; 4th February 2015 at 11:40.
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    Quote Originally Posted by Ed1 View Post
    My question is, what are my options now?
    - Is there some way I can opt out of the services restriction element of the next contract in any way when I sign?
    You could negotiate to have it removed, but your opt out status has already been determined. Either way, even if you aren't opted out of the regulations, then you still need to take an eight week break before you can go direct.

    Quote Originally Posted by Ed1 View Post
    - Do I have any rights that mean I break this 6 month restricted services clause?
    Yes - you have the right to break the clause and deal with any legal proceedings that arise from your breach of contract

    Quote Originally Posted by Ed1 View Post
    - The Agency seems to pay my bills regardless of having the contract signed or not - could I just continue, without signing, then in 6 months tell the agency the 6 month period from when I last signed has passed so I am leaving them?
    No, because you have entered into a contract by way of your conduct.

    Quote Originally Posted by Ed1 View Post
    Any constructive advice is most greatly appreciated!
    Ask them what it will cost to buy your way out of the contract, and pay that. Or just have them there and they earn the fees agreed to.
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    Quote Originally Posted by BlasterBates View Post
    I think you're tied in, so you'll probably have to pay your agency off to get shut of him.

    You can take some legal advice as restriction clauses have limitations and there are cases you can ignore it but I think in this case you can't as the agency is protecting a legitimate interest.
    I concur - it's a legitimate interest, and six months isn't an unreasonable restriction.
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    Quote Originally Posted by TheFaQQer View Post
    I concur - it's a legitimate interest, and six months isn't an unreasonable restriction.
    Unless you are NOT opted out

    Edit: Fixed
    Last edited by tractor; 4th February 2015 at 13:21.

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    Quote Originally Posted by tractor View Post
    Unless you are NOT opted out
    FTFY

    In which case, you've just got to take an eight week break at the end of the contract before you can go back direct. Which, unless the agent is taking the piss, is going to cost a hell of a lot more than you'll ever make back by bypassing the agency.
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    AMH
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    maybe a different way to approach it.....

    You negotiate a price to be released with the Agency & not have the handcuff clause (maybe 6 months worth of agency fees as a maximum?).
    You tell your Client (not Employer - your limited company is your employer!) the release fee.
    Client agree to pay you the same as they pays the agency now.
    Once you have been reimbursed of the release fee, you drop your fees that meets in the middle.

    or something to that effect.

    Client is being clever by getting you to pay/negotiate a release without the handcuff clause.

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    Default been there, done that

    hi,
    I was getting fed up of the 6 month lock-in, so "cleverly" negotiated the contract to have it removed --as the first contract was only for 3 months and a 6 month lock out was onerous. I also had to have a different job role if I returned to the client. SO, fast forward 6 months and I brilliantly executed my "ditch the agency" plan. Changed my role and told the agent to beat it.

    That went well -right up until the agent pointed out that the Client side of the contract (which I didn't see) has the same original clause, so tough luck. I then had the option of buying my freedom (6 months of agent commission up front), or working for 6 months and then I would be freeeee. I did the latter, and then spent a year or so on a 10% increased rate....

    But, the hassle factor was high, it annoyed the client, and it reminded me that *everyone* dislikes contractors.
    Especially jumped-up bell-ends like me.

    I've got bored with fighting agents. really bored.

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    Also worth remembering the agent does add some value, even if it doesn't seem like it

    Assuming you get paid promptly, on time, then that is a big plus. I worked direct for a while, and without exception, was chasing every invoice. Typically 2-3 months till I got paid. It caused bad feeling when I threatened to charge them interest - and, perhaps coincidentally, my contract terminated soon afterwards.

    At current clientCo, agent pays me 14 weeks after the end of the month. Another contractor who went direct was waiting 45 days, although AFAIK, he was then always paid 'on time'.

    Knowing the money will be in yourCo's bank at the right time is a big plus.

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