Contract Advice....Please!

**Angela Macready** · 12 August 2010, 10:43

The clause is quite standard from the contracts I have seen and seems from the information you have given, enforceable. You didn't put what the 20% was of exactly and that may be the bit you could argue about if that seems unreasonable.

If you have a good relationship with the agent, why not try to negotiate a deal? They may not take it obviously but it may be worth a try.

Alternatively, if the direct route is going to save you and the Client money overall, why not ask them to contribute to the payment?

Good luck

Angela Macready
* The advice given in this forum is general advice only *

**northernladuk** · 12 August 2010, 10:58

I would let your client work this out. He carries a lot more weight with the agent than you do. If the agent wants more business from your client he will have to swallow a bit along the way. The client should be able to negotiate you out of this clause if he is tough enough with the agent.

These types of clauses are enforceable but it would have to go to court. I have heard plenty of cases where people have negotiated (or even ignored) these clauses with a bit of hassle but little fallout but never heard any case going legal. There was however a thread awhile ago where someone went direct and the agent witheld the last payment (illegally) to cover costs but I can't remember if the poster got their money eventually.

Just read your post again, 12 months isn't enforceable as it is unreasonable. It is normally 3 or 6 I think.

Obviously the client is going to save some money so you need to re-negotiate your rate. You can point out the fact that you are now over 2 years so can no longer claim expenses so ask them to at the very least add enough to cover your loss of expenses.

**lje** · 12 August 2010, 12:33

Are you opted in or out? If you are opted in then there is a maximum length of a handcuff clause which they can apply. I don't know what it is but I think it's in the region of 8 weeks. The answer will be in other posts on this site if you do a search.

**Fresh Air** · 12 August 2010, 15:44

Thanks for all your responses, I try to answer everyone....

My feeling is that I will need the support of the Client to aid in any discussion to negotiate my release from this clause on the basis that they will likely have other temporary workers in the workplace...not ideal as I know Clients will often not want to get too involved.

Opted-In or Opted Out....I am opted-out so that doesnt help in this case!

The 20% refers to the total remuneration agreed to be paid by the Client for the relevant period of provision of the services (but not exceeding 12 months). So I'm assuming this means if it is a 12-month contract, my company would have to hand over 20% of the agencies income expected from the Client during that 12-month period (not 20% of what they pass on to me

)

**BolshieBastard** · 12 August 2010, 19:06

Originally posted by Fresh Air View Post

My company (with me as a named representative) has been contracted via an Agency to the same End-Client for over 2 years, and the End-Client has now suggested that I contract directly with them.

There are two points worth mentioning - firstly, the Client/Agency contract has a clause that states that they (the End-Client) can come to the service provider (the Supplier) after 'X' number of weeks. I have no written evidence of this but the End-Client has advised me this in place.

Secondly, the Supplier/Agency contract has a ‘restrictive covenant’ that states that "...during the contract term or thereafter for a period equivalent to the period of this agreement (but not being less than 3 months nor more than 12 months) either directly or indirectly (whether under a contract of services or contract for services or through any third party) provide any services to the Client or End-User except through (X agency) unless the Supplier shall first have paid to (X agency) a fee of 20% of the total remuneration...."

What is my position when looking to go direct with the end client?

Is this covenant 'reasonable' and ‘enforceable, particularly bearing in mind the total length of time I’ve been contracting through them to the same End-Client?

(Note that it has not been on the same contract - my company has had a number of consecutive contracts of varying lengths with the Agency, but each has included the same T&C's)

Any advice would be much appreciated.

If I've read this right, your client can end their agreement with the agency who recruited you to work for them (the client) but, your agent has a clause in your contract which says you have to pay 20% if you return to the same client within x period of time. The client wants you to contract direct with them, yeah?

That being the case, tell the client you'll agree to this but they have to pay the 20% to the client and you wont work direct until you have written agreement between all parties your co wont get stiffed for the 20%!

**Wanderer** · 12 August 2010, 22:39

Originally posted by Fresh Air View Post

Opted-In or Opted Out....I am opted-out so that doesnt help in this case!

Oh dear, that was a bit of a mistake then.

Chances are that the Agency will just drop the matter. If they don't, you could argue that it's a restraint of trade and therefore can't be enforced. Tell them if they take it to court and your Co wins then it will void this contract term for all their contracts so they will never be able to enforce it again. It raises the stakes and they will probably let it go.

Alternatively, you can take all the money out of your company and form a new one. The agency can only enforce the contract against your old company and they will be flogging a dead horse because it will have no money.

**NotAllThere** · 13 August 2010, 05:19

The opinion on this board is that even if you think you're opted out, you're opted in. I wonder what a court will decide on that one?

Who is your contract with - i.e. who is the supplier. You or your ltdco? Because you could always close down your ltdco and start up a new one.

**Wanderer** · 13 August 2010, 07:54

Originally posted by NotAllThere View Post

The opinion on this board is that even if you think you're opted out, you're opted in.

Good point.

Fresh Air, when you opted out, did you opt out in writing before you met the client? If you opted out because it was included in your contract or after you had met the client then that may not be a valid opt-out therefore they can't enforce the exclusivity clause against you.

I think your first action is to tell the client about the lockout clause and ask them to deal with the agency on your behalf. The client has a lot more clout than a contractor.

**Fresh Air** · 13 August 2010, 11:06

Originally posted by BolshieBastard View Post

If I've read this right, your client can end their agreement with the agency who recruited you to work for them (the client) but, your agent has a clause in your contract which says you have to pay 20% if you return to the same client within x period of time. The client wants you to contract direct with them, yeah?

That being the case, tell the client you'll agree to this but they have to pay the 20% to the client and you wont work direct until you have written agreement between all parties your co wont get stiffed for the 20%!

Hi Bolshie - yes you have it right; the client has a contract with the agency stating that they can go direct to the supplier after X number of weeks, but my contract with the agency has the previously mentioned restrictive covenant.

As it is the Client who will be saving by me going direct, I agree with you and some discussion will need to take place. Although my concern is that the client will take into account the agency percentage during any negotiations or reviews

Contract Advice....Please!