A handcuff query with a twist...

[Regur]

Hi all. I need some help please!

Ok - yes I have searched fairly extensively but found no situation comparable to the the one I am currently in.

I have been with the same client now for two and a half years, through an umbrella company. In which I am now the last contractor through this particular agency due to their costs being significantly higher than others on their preferred supplier list. The agency has been told by the client that they will get no further business as they are unwilling to negotiate their margins. Because of this, the agency has no interest in paying on time, messing things up and generally being obnoxious to the point where their relationship with the client has deteriorated significantly.

Now the Client would like to see me move to another on their approved supplier list. A win for them, and a win for me as I would be offered a long extension.

Now the quandary. I have had a handcuff clause in the umbrella contract that prevents me working at the client for 12 months unless I pay them a chunk of money. They were a bit sneaky about it as they worded the contract as you sign the contract to start with the client, you opt-out (a Docusign where you cannot change or amend bits). The agency have sent me a new contract for the Ltd company with the same trick. I haven't signed it as yet for the new extension.

My thinking is this, if I now elect to become opted-in for the period of the extension as it is a "new contract" through my new LtdCo (with a duration of a couple of months), the handcuff clauses would no longer apply to me or my LtdCo after I finish. I can stick it out for a couple of months, finish the contract, wait a much shorter time and then go opted-out through another "approved" agency which the client would be far happier about without a risk of the current agency throwing their toys out of the pram and wanting paying off?

The above makes sense to me but apologies if anything needs clarifying!

[northernladuk]

Seems pretty straightforward so not sure where the twist is.. although there is one line that confuses me.

There might not be any threads on your exact situation (which I am sure there is but anyway) there are plenty on handcuffs which should give you the knowledge and answers you need.

So, a handcuff can only be enforced if it's fair and reasonable. 12 months is arguably unreasonable so won't stick when it gets to court but it's a mess if it gets that far so lets park that one.

So, fair and reasonable. It's there to protect the agencies revenue stream. They got the gig its making sure they get the money. You can't just then swap in a cheaper one cutting off the original ones revenue. Now courts always favour the part that is losing something i.e. the old agent....

BUT....

They can't pull a handcuff if they aren't losing anything. If the client dumps the agency it's a business decision. That means the agency no long has dibs on the gig so the handcuff falls apart. They cannot hold you to a handcuff when they aren't going to get another penny. That's just cutting their noses off to spite their faces. No judge in the land will stand for that.

You need to try get the client to make it clear to the old agency they've withdrawn the gig, even better, take them off the PSL to avoid any argument. Then they are free to give the work to another agent and off you go. Make sure the client does this so if the agency get shirty with you you just shrug your shoulders and say what can I do. You are going to be in a fight for your money. They have no right to it but you may have to start quoting some late payment legislation and maybe even get a solicitor to write a letter but you'll get it eventually.

There maybe complications due to the contract between the old agency and the client but that is the clients problem. If they want rid of them they will deal with it. Clients don't like fighting on your behalf cause it suits you but if they want rid then happy days.

I'm confused why you say Umbrella contract though. I dunno how umbrellas work but don't you mean the contract from the agency presented to your umbrella?

I wouldn't sign anything and see if the client is willing to back you up over a change as soon as possible. If they say 'yeah leave it to us' then happy days. See what they say and then you'll have a clearer path of action.

[Agent]

Seems pretty straightforward so not sure where the twist is.. although there is one line that confuses me.

There might not be any threads on your exact situation (which I am sure there is but anyway) there are plenty on handcuffs which should give you the knowledge and answers you need.

So, a handcuff can only be enforced if it's fair and reasonable. 12 months is arguably unreasonable so won't stick when it gets to court but it's a mess if it gets that far so lets park that one.

So, fair and reasonable. It's there to protect the agencies revenue stream. They got the gig its making sure they get the money. You can't just then swap in a cheaper one cutting off the original ones revenue. Now courts always favour the part that is losing something i.e. the old agent....

BUT....

They can't pull a handcuff if they aren't losing anything. If the client dumps the agency it's a business decision. That means the agency no long has dibs on the gig so the handcuff falls apart. They cannot hold you to a handcuff when they aren't going to get another penny. That's just cutting their noses off to spite their faces. No judge in the land will stand for that.

You need to try get the client to make it clear to the old agency they've withdrawn the gig, even better, take them off the PSL to avoid any argument. Then they are free to give the work to another agent and off you go. Make sure the client does this so if the agency get shirty with you you just shrug your shoulders and say what can I do. You are going to be in a fight for your money. They have no right to it but you may have to start quoting some late payment legislation and maybe even get a solicitor to write a letter but you'll get it eventually.

There maybe complications due to the contract between the old agency and the client but that is the clients problem. If they want rid of them they will deal with it. Clients don't like fighting on your behalf cause it suits you but if they want rid then happy days.

I'm confused why you say Umbrella contract though. I dunno how umbrellas work but don't you mean the contract from the agency presented to your umbrella?

I wouldn't sign anything and see if the client is willing to back you up over a change as soon as possible. If they say 'yeah leave it to us' then happy days. See what they say and then you'll have a clearer path of action.

It's not as simple as you've made out here NLUK. The end client can't just turn around and say - we're not working with you anymore, then hire all of the contractors directly and then expect a judge rule in their favour by saying, 'they're no longer on our PSL so they have suffered no loss'

If this was at all legal then it's the easiest get out for every client to hire contractors directly. Think about it for a minute, you have 100 contractors on site through Hays, their margin is £100 per man, you think that the client can turn around and say we're not going to use you any more so you can't prove a loss then there would never be a single dispute over candidate ownership.

I've been to court on numerous times because of clients trying to take candidates directly (perm and contract) - what sticks is the contractural agreement that's in place and how it's allowed to be terminated. If the agency is worth their salt then they'll have a termination agreement in place which outlines how much it costs to terminate the agreement and release any contractors from their 6-12 month clause. In my past experience this has been in the region of 6 months worth of margin.

At the end of the day, it isn't your problem, it's the clients. If they are happy to terminate their contract with the agency and want to take the risk then go for it.

[northernladuk]

It's not as simple as you've made out here NLUK.

Yeah I'm absolutely sure it's not but my post was long enough as it is but tried to get the reasonable points across. I just can't post the whole in's and outs due to time let alone not knowing some of the points you make.

Interesting insight into the contract points between client and agent though so thanks for that.

[Agent]

Hi all. I need some help please!

My thinking is this, if I now elect to become opted-in for the period of the extension as it is a "new contract" through my new LtdCo (with a duration of a couple of months), the handcuff clauses would no longer apply to me or my LtdCo after I finish. I can stick it out for a couple of months, finish the contract, wait a much shorter time and then go opted-out through another "approved" agency which the client would be far happier about without a risk of the current agency throwing their toys out of the pram and wanting paying off?

There are still temp to temp transfer considerations even if you are opted in. The agency is likely to have an extended hire period in their contract with is what they must offer should the client want to hire you directly. This extended hire period is likely to be a minimum of 6 months and as long as the agency offer it then the client must take them up on it or pay a one off fee (which will be equivalent to the margin for 6 months, so no real difference).

If you are opted in and then end your contract, you'll have to wait 8 weeks before returning to the client directly. Can you afford to wait 8 weeks (or get a filler contract)?

https://www.gov.uk/employment-agenci...-transfer-fees

There is a misunderstanding that being opted-in stops any fees being charged and that candidates can simply dump an agency and go direct, this isn't the case.

[Agent]

Yeah I'm absolutely sure it's not but my post was long enough as it is but tried to get the reasonable points across. I just can't post the whole in's and outs due to time let alone not knowing some of the points you make.

Interesting insight into the contract points between client and agent though so thanks for that.

Hell, if the client's up for it then maybe it is that simple. Some agencies won't include any penalty clauses in their contracts, some don't even state an alternative hire period so you could be correct about being unable to prove loss if there's nothing in their contract.

[ladymuck]

... The end client can't just turn around and say - we're not working with you anymore, then hire all of the contractors directly and then expect a judge rule in their favour by saying, 'they're no longer on our PSL so they have suffered no loss'

I disagree. When I worked at Barclays, the project I was on went through four agencies in the 16 months I was there. The programme manager just said "from this date, you're with agency X" and the agencies just sucked it up and dealt with it.

(a Docusign where you cannot change or amend bits)

You do realise that you can read the document online and then go back to the agency and tell them you don't like clause x.x and could they change or remove it before you sign? You shouldn't expect to directly edit the document and send it back.

[Agent]

I disagree. When I worked at Barclays, the project I was on went through four agencies in the 16 months I was there. The programme manager just said "from this date, you're with agency X" and the agencies just sucked it up and dealt with it..

Like I say, it entirely depends on the contract that the agency has, maybe they didn't fancy their chances in taking to Barclays to court or maybe they didn't have any penalty clauses in their contract. Fact remains that if there's a contract that includes a penalty clause for termination then that stands.

[eek]

Like I say, it entirely depends on the contract that the agency has, maybe they didn't fancy their chances in taking to Barclays to court or maybe they didn't have any penalty clauses in their contract. Fact remains that if there's a contract that includes a penalty clause for termination then that stands.

Why are you continually talking about agencies when the issue is with the OP's umbrella?

You may think you know how agencies work but that isn't what's being talked about here.....

[Regur]

Thanks for the comments all - lots to digest!