Is this clause legal??

[unisign124]

On the other hand, you did sign the contract and agree to the terms. They can come after you if they want to, and you'll probably lose and have to pay their costs. That's quite a big risk everybody is suggesting you take.

Changing your Ltd. company name wouldn't help, but you could start a new Ltd. company.

Yes I agreed to my terms and conditions and have been happy working there for 1 year.
Agency originally had 13 week gig with 30% markup and due to my hard work and fitting in well and making improvements have extended for a further 9 months.
Agency has had over £16,000 from client (Over and above my hourly rate).
Client feels that at some point I should become a free agent but Agency wants another £16,000 to release me.
I realise that its a client/Agency issue but come Monday I'm theoretically on the bench.

Taking Tim's point, continuing with the Agency with weekly pay would be ideal for me but the client wants to cut costs.

Thinking seriously about forming another company for Monday, as I enjoy working there and have unfinished projects to complete.(Sounding like a Permie now.....lol)

[VectraMan]

Yes I agreed to my terms and conditions and have been happy working there for 1 year.
Agency originally had 13 week gig with 30% markup and due to my hard work and fitting in well and making improvements have extended for a further 9 months.
Agency has had over £16,000 from client (Over and above my hourly rate).
Client feels that at some point I should become a free agent but Agency wants another £16,000 to release me.

Yes it never seems fair, especially when there's no end to it. I don't mind the agent getting a big cut first time round as they've done something, but renewals are nothing to do with their service and only about yours. But that's their business model.

Thinking seriously about forming another company for Monday, as I enjoy working there and have unfinished projects to complete.(Sounding like a Permie now.....lol)

Don't take my word for that. It depends how the clause is worded, it'll probably have something to stop that otherwise everybody would do it.

[unisign124]

Don't take my word for that. It depends how the clause is worded, it'll probably have something to stop that otherwise everybody would do it.

Thats part of my problem. Clients contract is obviously worded differently to mine and without asking to see it I don't really know. Client only has me through an agency at senior level, all others are direct, so they are a bit green. Person in charge of HR didn't even know about IR35 when she was telling me my hours of work, ie she was writing my new contract as if I was a permie.

All client has said is that for agency to release me they have to be paid 35% of my years salary.

[r0bly0ns]

I had a slightly similar situation, an agency got a gig but the agency refused to work with the client's contract. They were an American firm and refused to change the contract.

Agency phoned me up and said the gig was a no go.
Client phoned me up and said they wanted to go direct.

Me being honest and nieve phoned the Agency and told them


I started work and the client and agency argued about fee's and whatnot and I never got involved.

So you shouldnt.

If neither you nor the agency got a contract there is no way they would be able to enforce money.

The client did end up paying the agency some money for my services, but the point I was trying to make was that this had nothing to do with me. Once I had agreed to go direct the agency never contacted me about it and went after the client directly.

So if the client has said they will handle the agency, I say let them do it and just go for the gig direct.

[TheFaQQer]

Is this not a restriction of trade?

Possibly, but probably not. If the restriction is regarded in a legal sense as too restrictive, then it is. If not, then it isn't - and it's a bit of a grey area. For example, clauses prohibiting you from working for any competitor in the same town would probably be too restrictive; a clause prohibiting you from working direct for a certain period probably would not be.

Cannot I turn up there if I rename mycoLtd?

No. If you rename the company, the contract still stands. Even if you set up a new company, then the clause will probably still stand - for example, it's not uncommon to have something like "Neither you nor any Consultant..." which is designed to catch the company and their representatives from going direct.

Whilst the main focus for the agency would be to go after the client, there is nothing to stop the agency from chasing you as well, if there is a clause in your contract that stops you going direct. Some people here would suggest that you do it anyway, since they think it's unlikely that the agency would chase you. If it were me, I certainly would not do it, for a simple reason. The agency CAN do it, and if they do, then they will WIN. This is not a position that you can fight in court - if they go after you, then you will lose. I wouldn't like to bet on what the agency will do.

Why not suggest to the client that they pay you some of the commission that they were paying the agency (i.e. increase your daily rate) and then you and they split the costs and pay the agency £5000 each. Then get the agency to agree to take a lower sum than they want, since they aren't going to get any money from the client if they don't.

[unisign124]

No. If you rename the company, the contract still stands. Even if you set up a new company, then the clause will probably still stand - for example, it's not uncommon to have something like "Neither you nor any Consultant..." which is designed to catch the company and their representatives from going direct.

Whilst the main focus for the agency would be to go after the client, there is nothing to stop the agency from chasing you as well, if there is a clause in your contract that stops you going direct. Some people here would suggest that you do it anyway, since they think it's unlikely that the agency would chase you. If it were me, I certainly would not do it, for a simple reason. The agency CAN do it, and if they do, then they will WIN. This is not a position that you can fight in court - if they go after you, then you will lose. I wouldn't like to bet on what the agency will do.

Why not suggest to the client that they pay you some of the commission that they were paying the agency (i.e. increase your daily rate) and then you and they split the costs and pay the agency £5000 each. Then get the agency to agree to take a lower sum than they want, since they aren't going to get any money from the client if they don't.

Thats the annoying thing. If I walk into a new job tomorrow then the Agency gets nothing so why do they think they can hold the client to ransom for £16,000.....seems extremely greedy and short-sighted.
Agency concerned doesn't specialise in my field so its very unlikely our paths will cross again but that said its a client/Agency dispute and I'm in the middle presently unemployed.

The main problem about me paying £5000 is that its more than 5 weeks full income and we are all possibly one day away from being put on the bench.The idea is good in theory but there are no guarantees I would re-coup the money.

[unisign124]

What are your thoughts of an aquantance being hired instead of me and him exercising his right of substitution??....or am I clutching at straws?

[TheFaQQer]

What are your thoughts of an aquantance being hired instead of me and him exercising his right of substitution??....or am I clutching at straws?

I think that it depends on the wording of the contract - one I looked at today said that it applied to the company and it's representatives. Yours may not, and IANAL but I'd be surprised if you could do it.

Doing it through a mate also means that if they are on flat rate VAT, then they will lose out by doing it for you, unless you are going to let him keep some of the money as a handling fee.