Agency withholding percentage of money.

[WordIsBond]

There's nothing unethical about it.

But it does shift risk to the contractor so I'd want to be paid something for that risk. If they are going to hold back 10% I'm going to want that final payment to be more than 10% to compensate for lost interest as well as the risk that I never get it.

One risk is that the agency is in trouble and they are doing this to cover their own financial messes, and that you'll never get that final payment. I'd certainly want to have IPSE+, I think they cover things like that, don't they?

[BlackCountryContractor]

One thing I found why agencies hold back percentages is also due to finances, contractors who do their homework (through sites such as company house, endole etc) checking to see if agencies are in the black financially can be mislead if agencies are trying to cover up bad accounting (which we have seen in the past of contractors not been paid due to scams or agencies going bust).

[handyandy]

I think this all depends on your perspective.

If you would normally expect to earn £500 a day for a gig like this and they offer £500 with a 10% withholding (ie you get £450 a day with the remainder held till end of contract) then it's a BAD deal commercially for you.

If they offer to pay you 700 per day with £70 withholding (ie you are taking home £630/day guaranteed) then it looks like a good deal that rewards you for taking something that sounds like hard work and gives you an incentive to stay and finish the deliverable.

As a previous poster mentioned it is the way things are shifting at the 'professional' end of the market. I've been at places where the client has driven such a 'terminal bonus' when they were scared of people leaving before a major deliverable. It is also very common for bigger (and not so big) consultancies to have some kind of 'gain share' or risk/reward commercial agreement.

The one thing I would insist on in such a situation is that the end client is the one driving this and that their contract with the agency includes either a withholding or a clawback arrangement. That way you have assurance its not an agency scam. (Not sure what that does to IR35 status).

I do suspect this kind of arrangement is where higher end contractors (ie with very specific skills and experience) will need to go in the future so that clients feel they have some shared risk. I can, however, see a lot of things that could go wrong with such arrangements and, as they are not currently common, there will be a lot of horror stories posted here over the next 10 years.

The one thing I would add is that, based on what the OP stated, I don't see anything unethical about the proposed arrangement. But the devil will be in the details (ie, rate, detailed description of services to be provided, termination conditions, length of time before you get the terminal payment, etc.). Do your homework and negotiate hard and you could be on to a winner.

[TheGreenBastard]

Me neither and it's really poor but it's hardly unethical which was my point really.

Unless the agency is selling a dud, which happens routinely and is unethical.

[Anonimouse]

The Olympic project was like this, they wanted everybody to stay till end date, problem was due to the clause they struggled to get anyone to start.

[LondonManc]

I think this all depends on your perspective.

If you would normally expect to earn £500 a day for a gig like this and they offer £500 with a 10% withholding (ie you get £450 a day with the remainder held till end of contract) then it's a BAD deal commercially for you.

If they offer to pay you 700 per day with £70 withholding (ie you are taking home £630/day guaranteed) then it looks like a good deal that rewards you for taking something that sounds like hard work and gives you an incentive to stay and finish the deliverable.

As a previous poster mentioned it is the way things are shifting at the 'professional' end of the market. I've been at places where the client has driven such a 'terminal bonus' when they were scared of people leaving before a major deliverable. It is also very common for bigger (and not so big) consultancies to have some kind of 'gain share' or risk/reward commercial agreement.

The one thing I would insist on in such a situation is that the end client is the one driving this and that their contract with the agency includes either a withholding or a clawback arrangement. That way you have assurance its not an agency scam. (Not sure what that does to IR35 status).

I do suspect this kind of arrangement is where higher end contractors (ie with very specific skills and experience) will need to go in the future so that clients feel they have some shared risk. I can, however, see a lot of things that could go wrong with such arrangements and, as they are not currently common, there will be a lot of horror stories posted here over the next 10 years.

The one thing I would add is that, based on what the OP stated, I don't see anything unethical about the proposed arrangement. But the devil will be in the details (ie, rate, detailed description of services to be provided, termination conditions, length of time before you get the terminal payment, etc.). Do your homework and negotiate hard and you could be on to a winner.

With people jumping ship for better rates, it can be client-led.

It may also be agency-led, with the client having a poor interview process or poor working environment, leading to either bad contractors being found out a few months in or good contractors walking because they're, say, getting pushed into IR35 despite what the contract claims.

Either way, I'd up my base rate, credit-check the agency and client and go in with a small dose of paranoia.

[jmo21]

A friend had an agency ring him up about a role; he was told there had been a high turnover of contractors at the client, mostly leaving early therefore the agency would withhold 10% of invoiced money which would then be paid upon completion of the contract.

Regardless of the ethics of the 10% withholding (I don't agree it's unethical btw), that is enough of a red flag in and of itself