Another Restrictive Covenant query

[PeterF]

Hello everyone, would appreciate some advice. Inside-IR35 contractor via brolly then agency to client co., been there a few years. I have been offered work in a different business unit, work which is not able to be done via the current chain of brolly/agency as the new area of the business doesn't (and won't) use that arrangement. Brolly and client happy, but agency digging in on all things 'restrictive covenant', trying to enforce a 6-month gap if they are not be involved. Whether I left and went to the new position immediately or left it 6 months the agency is impacted the same either way (their cut: £0). My personal contract doesn't have a covenant clause in it - I asked them if it could be removed from my personal contract as a test, they said absolutely no it can't. They claim there is also a covenant clause in the client-interfacing contract but whether that is true or not I do not know, but I suspect it is indeed true.

Not that it matters but the agency were 'given' me via transfer of other agency, so no investment on their part. They have also been offered a sum which is slightly larger than their cut for 6 months to release me to take up the new position, which they have declined. AFAIK there are elements of restraint of trade here and their trying to enforce the covenant would fail the 'reasonably necessary' test as the only impact to them they could argue, they have been offered and declined.

Personally I'm of a mind to crack on with the new position, let the agency try do their worst and deal with it if/when. But, if the client contract has a covenant they would also need to be on board with that thinking and they are very risk/hassle averse! As much as it would likely be an easy thing to make go away if the agency tried to force it I suspect client co. wouldn't want the bother.

Any thoughts, experience or advice on how to proceed would be appreciated. Thanks!

PF

[JustKeepSwimming]

Hello everyone, would appreciate some advice. Inside-IR35 contractor via brolly then agency to client co., been there a few years. I have been offered work in a different business unit, work which is not able to be done via the current chain of brolly/agency as the new area of the business doesn't (and won't) use that arrangement. Brolly and client happy, but agency digging in on all things 'restrictive covenant', trying to enforce a 6-month gap if they are not be involved. Whether I left and went to the new position immediately or left it 6 months the agency is impacted the same either way (their cut: £0). My personal contract doesn't have a covenant clause in it - I asked them if it could be removed from my personal contract as a test, they said absolutely no it can't. They claim there is also a covenant clause in the client-interfacing contract but whether that is true or not I do not know, but I suspect it is indeed true.

Not that it matters but the agency were 'given' me via transfer of other agency, so no investment on their part. They have also been offered a sum which is slightly larger than their cut for 6 months to release me to take up the new position, which they have declined. AFAIK there are elements of restraint of trade here and their trying to enforce the covenant would fail the 'reasonably necessary' test as the only impact to them they could argue, they have been offered and declined.

Personally I'm of a mind to crack on with the new position, let the agency try do their worst and deal with it if/when. But, if the client contract has a covenant they would also need to be on board with that thinking and they are very risk/hassle averse! As much as it would likely be an easy thing to make go away if the agency tried to force it I suspect client co. wouldn't want the bother.

Any thoughts, experience or advice on how to proceed would be appreciated. Thanks!

PF

If it's not in your contract then it's nothing to do with you. Agency and client would have to sort it out.

As an aside, IMO the agency has no legs. It still boils down to them having to show damages and to show they took reasonable action to mitigate those damages. Refusing a hefty pay off from the client would make their lawyer squirm.

[northernladuk]

If it's not in your contract then it's nothing to do with you. Agency and client would have to sort it out.

As an aside, IMO the agency has no legs. It still boils down to them having to show damages and to show they took reasonable action to mitigate those damages. Refusing a hefty pay off from the client would make their lawyer squirm.

This in a nutshell. The agency has absolutely no skin in the game so completely wrong to be holding you to any handcuff and if you push it they'll back down because they know they are just trying it on. They are just trying the who blinks first game so just get on with it.

[PeterF]

Thank you both. What I'd like to do is approach the client with the output from a solicitor backing up the notion that the agency has no case, I am hoping this will assure them enough to let me change position and deal with the agency if and when they try their luck. Are there any particular solicitors you'd recommend I discuss this with and get a letter/some clarity from? Thanks again.

Pete.

[Lance]

just to add, you presumably only have a contract signed with the umbrella as your employer?
If that's the case the agency have no hold over you in any way, shape or form.
If the agency don't like it they can only deal with the client and/or the umbrella.

[PeterF]

just to add, you presumably only have a contract signed with the umbrella as your employer?
If that's the case the agency have no hold over you in any way, shape or form.
If the agency don't like it they can only deal with the client and/or the umbrella.

Yes indeed. I have a contract with brolly, further contract exists between brolly and agency (which I have seen, no restrictive clause in it). The contract between agency and client co. I have never seen personally, as you would expect.

The agency have no hold over me personally, but if I leave one week and return to a different business unit outside of the agency the following week the agency claim they can/will invoke the restriction. They have no damages or loss to argue given the offer to them so it's all a bit silly, but I am conscious if they were to try push it it would be client co. who need to get involved in making them go away. Right?

Regards, Pete.

[northernladuk]

Yes indeed. I have a contract with brolly, further contract exists between brolly and agency (which I have seen, no restrictive clause in it). The contract between agency and client co. I have never seen personally, as you would expect.

The agency have no hold over me personally, but if I leave one week and return to a different business unit outside of the agency the following week the agency claim they can/will invoke the restriction. They have no damages or loss to argue given the offer to them so it's all a bit silly, but I am conscious if they were to try push it it would be client co. who need to get involved in making them go away. Right?

Regards, Pete.

Kind of but it's unlikely it will get that far. A strongly worded email with the facts of the case and some supporting articles should show them you mean business and know what you are talking about. They should back down so as not to jeapordise their relationship with the client. They won't be happy if they take this rubbish to their door.

A bit basic but this explains it. You might need to dig around a bit to find a specific article that clearly explains why they are not enforceable when the agent has no skin in the game. They will be out there for sure.

https://www.contractorcalculator.co....forceable.aspx