Agency invoicing contractor for margin

[WindyAnna]

The client I work for uses a managed service for contractor recruitment and payment, they work at a margin of around 6%. The managed service uses other agencies where required but still at the same margin. If another agency is used then the managed service co pays the contractor their rate direct to them and the margin to the agency. This way the managed service knows the contractor is getting their genuine rate.

Last week I discovered that one of my team had been told by his agency that the way it works at this client is that the money he gets each week from the managed service includes the agent's cut as well and that the contractor is liable to pay this to the agent. Contractor signed an agreement with agent to that effect!

I found this out as we were having a general slagging off of agents in the office and I mentioned that my agent had tried this trick on me but I had refused and shopped them to both the managed service and the client. Contractor then piped up that he had not realised that it was dodgy and had agreed and been paying 20% to the agent each week!

I know this is WRONG but what is the legal situation on this? Client and Managed Service have struck the agency off their PSLs but I am sure there is more we can do.

I know contractor was naive but that doesn't mean he should be taken advantage off! I almost rejected the contractor for being too expensive at the time we took him on, I now know why he was!

All advice gratefully received

Cheers

Windy

[TykeMerc]

This looks a bit like having to pay an agency for finding work, I'm pretty certain that's illegal (Malvolio can confirm) I reckon that the contractor should be going after the agency to get his cash back.

[SueEllen]

It is illegal - Employment agencies charging a fee to job seekers - Legal Issues

The agency needs to be shopped.

I've looked around the web the Government Department that deals with it is Business, Innovation and Skills. Only number I can find is 0800 917 2368

[BlasterBates]

If it's a contractor, I don't see that it makes any difference, other than you know as a contractor what the agency is getting. Either the agency pays you or you pay the agency.

Actually works to the disadvantage of the agency as they can't charge what they like, but the client makes sure of that by using a managed service company.

I can't see that the agency would be trying it on because you could simply check with the client anyway, and then the agency would simply get dropped, so why would they try it on like that?

[Sockpuppet]

If it's a contractor, I don't see that it makes any difference, other than you know as a contractor what the agency is getting. Either the agency pays you or you pay the agency.

Actually works to the disadvantage of the agency as they can't charge what they like, but the client makes sure of that by using a managed service company.

I can't see that the agency would be trying it on because you could simply check with the client anyway, and then the agency would simply get dropped, so why would they try it on like that?

I read it as the agency were getting their cut and the agency tried it on for another 20% so big disadvantage as your still in the dark.

Pretty underhanded and the agy need to be named, I can't see one of the big boys trying this not as getting onto PSL lists is so hard in the first place.

[WindyAnna]

Thanks for these replies. Indeed they were going after the 20% direct with the contractor.

As the client on this one I would never have know had I not told the anecdote about an agent trying it on with me and the contractor telling his tale. I am not going to let this lie.

It is a one man and his dog operation by the looks of it, not REC affliated. We are now in the middle of some legal stuff so won't name yet but don't worry I will!

Thanks again

Windy

[SueEllen]

If it's a contractor, I don't see that it makes any difference, other than you know as a contractor what the agency is getting. Either the agency pays you or you pay the agency.

May not make a difference but it's not legal. Even contractors are protected by the law.

[Wanderer]

Contractor then piped up that he had not realised that it was dodgy and had agreed and been paying 20% to the agent each week!

Moral of the story is that clients and contractors should always be transparent about how much the agency is taking. If they aren't then the agencies do all sorts of dumb tricks like telling the client the contractor has turned down the job (they didn't turn it down, it's just that the alternative candidate had a better margin for the agency).

We've got to fight these agencies, their stupid tricks don't help us or the clients - the only ones who win are the agents...