Restriction Clause - A Twist

[Contract2010]

Hello,

Been with an agency for about a year when the client decides that all agencies have to sign a supplier agreement. My agency decides not to for some reason (probably related to the prospect of a reduces mark up).

Consequently, my contract is not extended and, despite the client wanting me to stay, I cannot reyurn for 12 months due to the restriction clause.

Agency refuses to waive the clause claiming that it will damage future business with the client even tho they won't get any business until they sign up.

Is there anything that I can do to return to the client?

Use an umbrella company?

All help gratefully recieved

Thnaks

Peter Griffin

[BlasterBates]

A company can only claim damages for lost revenue, in this case iif you stay on it won't damage him because he wasn't going to get any work anyway. That I think in a nutshell would be your legal argument. A different matter if you jumped from a potential renewal to contract direct.

If you're finding it difficult to get another contract I would see a lawyer and look to renew through a different agency.

The likelyhood is the agency won't persue this.

Obviously better to get a completely different contract and avoid the hassle, but faced with benchtime or some lost revenue in damages better to go for that.

[northernladuk]

There is also talk that 12 months is unacceptable and breaches some edicts about right to work or something. Can't remember what the term is, it is somewhere in a thread on here. 3-6 months are the only ones that are enforceable.

They are only enforceable if a) the agent finds out... b) the agent can be bothered to take it legal...

I know a few people that returned, there was some sour grapes from the agent who wasn't going to get anything either way and then it died down. Talk to the client to see how risk averse he is.

[thunderlizard]

I have been in that situation and didn't find a way round it. Excuse my mixed metaphors but the agency is clutching at straws because it's the only card they've got left to play. The main problem is that they will have a similar, more enforecable, clause with the client. It's the main reason I now avoid using agencies as far as possible.

[Wanderer]

I cannot reyurn for 12 months due to the restriction clause.

Did you opt-out of the "The Conduct of Employment Agencies and Employment Businesses Regulations" before you were introduced to the end client? You would have had to do this in writing. Including the opt-out in your contract doesn't count. It also doesn't apply if you didn't opt-out before you were introduced to the client.

If you didn't opt-out then you are free to do as you please since the 1 year restriction isn't enforceable.

Even if you did opt-out (which is a bad idea in my view) then you could argue the restriction amounted to a Restraint of trade if the agency ever took it to court (which they won't). Even if it does go to court it would be your company as the defendant (not you), you are free to cease trading with your company and start a new one the next day, taking all the money out of your company. That way, even if they lose they will get nothing from your company anyway.

The main problem is that they will have a similar, more enforecable, clause with the client.

Not necessarily. Companies are much less likely to bend over to be shafted by agencies than contractors are....

My recommendation is that you get the new contract with the new agency sorted out to start the day after your existing one expires. Tell the old agency you are going to take a break from work for a while. Then don't ever speak to the old agent again.

[Zippy]

If the agency refuses to sign up with the client, then the agency no longer have them as a 'client'? The restriction clause wouldn't apply in this case, surely?

[JobsAGoodUn]

I ran into a similar thing a few years ago. I took a contract with BigCo thru AgencyA. Contract went well, but came to an end, so I left.

3 months later a different organisation in BigCo decided they wanted me. In the interim BigCo had declared a preferred suppliers list - and AgencyA weren't on that list. As you would expect, AgencyA tried to use this situation to get themselves put onto the list, but BigCo wouldn't have it.

AgencyA had a handcuff clause of 12 months in their contract with BigCo (but NOT in my contract), which they decided to impose. Meanwhile BigCo told me I could take up the contract, but it was up to me to sort out the handcuff arrangement with AgencyA.

In the end I threatened to sue AgencyA under restriction of trade laws - they couldn't insert a contract between me and BigCo, and they were determined to stop me going with another agency - unless I paid them the commission they would have been due. Under those circumstances I was advised that in a court of law I would win hands down. And it forced AgencyA to back down - I then went with another agency.

[jmo21]

I had a similar situation in my last contract and it happened with 3 weeks to go in the contract, with the old agency back dating the cancellation of my contract by a week - in other words according to them, I was essentially working without a contract for a week.

Needless to say I was fuming, to me, this didn't make much sense, but the old agency and client co had already sorted it out the transfer behind the scenes, and set us (me and 2 other tractors) up with a new agency.

I was a little nervous with my last invoice despite the fact I had signed timesheets, but it got paid on time, and all was well.

[centurian]

A company can only claim damages for lost revenue

That's the crux of it. In any legal action, you sue for damage - i.e you claim what a breach of contract has cost you. If through their own actions, they are incapable of making any money anyway, then your breach of the clause has not caused them any financial damage.

They can't just sue for the sake of it and expect to get money for nothing. Edit - that's not quite true. They could sue for punitive (punishment) damages as opposed to compensatory damages above. Don't think that would apply in these circumstances though.

[Contract2010]

Thanks for all the replies

Had the client been willing to take the risk and taken me on through another agency I would have accepted it. The client didn't want the hassle (and I can't blame them) so no extension.

Thankfully, I have found a new job, so all is well.

Cheers,

Peter Griffin