Legal query - going direct - contract clauses etc.

[Robwg]

I am currently contracted through an Agency to a consultancy. They in turn contract me out (at pass through rate) to another firm who are basically the end user.

It is my contract renewal up and I want to go direct to the end user to a) make more dosh and b) IR35 protection.

Normally this wouldn't be possible as most contracts have a six month clauses in them preventing you signing up for to the end user to protect the agency. However - in this case as far as the contract is concerned the end user is the consultancy. My real end user is the firm at the end - and they are willing to hire me on direct. It turns out the consultancy make no profit on me - the only person who does is the agency.

So - checking my contract I find I actually have a 6 month clause preventing me joining one of the consultancies clients to protect their business - that is it - nothing about the agency (mainly because the consultancy and agency are tied up in a long tirm deal) etc. However the end user has discussed with the consultancy and they are ok with me doing this - as they won't be losing out. The only person who will lose out is the agency.

I have asked for an email from the consultancy account manager confirming this - if I get the email - what are everyones opinions on the risk with this? Am I setting myself up with legal issues later on? Is it a no-no. Would the email hold up in court should another wing of the consultancy throw a wobbly and try and pursue this? How would they be able to show they have lost out as they don't make any money on me? Could the agency (who are the real ones who are losing out) do anything - given that the clause specifically says it is to protect the consultancies business.

Any opinions would be most appreciated.

Thanks

Robwg

[VectraMan]

Correct me if I'm wrong, but your contract is with the agent, not the consultancy. The consultancy can't give you permission to break your contract with the agent.

[ratewhore]

Sounds messy. Good luck!!

How does going direct offer you any degree of IR35 protection btw?

[Robwg]

How does going direct offer you any degree of IR35 protection btw?

I thought it was generally accepted that if you contract direct you are basically pretty IR35 proof - there is no higher/lower contract to worry about etc.

Correct me if I'm wrong, but your contract is with the agent, not the consultancy. The consultancy can't give you permission to break your contract with the agent.

I am not really asking for permission from them - I want to see where a challenge would come from.

I think I may get some legal advice.

[Robwg]

Correct me if I'm wrong, but your contract is with the agent, not the consultancy. The consultancy can't give you permission to break your contract with the agent.

Also - the clause specifically mentions that it is there to protect the Consultancies business. If the consultancy are ok with it then do the agency have any comeback - even though they aer the ones losing out (should they ever find out).

[XLMonkey]

I thought it was generally accepted that if you contract direct you are basically pretty IR35 proof - there is no higher/lower contract to worry about etc.

Nope, not generally accepted at all. You would still have to ensure that the contract terms were for services, not of service; and ensure that the working practices accurately reflected a business to business relationship.

You do have the advantage that there is no higher/lower contract, so you can see all of the terms of business that apply. But that doesn't make you IR35 proof.

[XLMonkey]

Also - the clause specifically mentions that it is there to protect the Consultancies business. If the consultancy are ok with it then do the agency have any comeback - even though they aer the ones losing out (should they ever find out).

You do need to get the contract fully reviewed - but I'm guessing that in this context the Consultancy may actually be the Agent (who will call themselves a recruitment consultancy or something similar).

[Robwg]

You do need to get the contract fully reviewed - but I'm guessing that in this context the Consultancy may actually be the Agent (who will call themselves a recruitment consultancy or something similar).

No it is fairly specific actually - mentions the consultancy by name and everything. The agency are not mentioned at all in relation to the clause.

It basically says 'to protect xxx'x business there is...blah blah blah'.

[VectraMan]

Also - the clause specifically mentions that it is there to protect the Consultancies business. If the consultancy are ok with it then do the agency have any comeback - even though they aer the ones losing out (should they ever find out).

You are breaking the explicit terms of the agreement you've signed, and the agent loses money as a result. So that's exactly when they would have comeback.

But as Mr Monkey says, does "consultancy" mean agent?

[Robwg]

But as Mr Monkey says, does "consultancy" mean agent?

No (please see post above) - they are quite specific in the term about the terms purpose and who the term is designed to protect.