Leaving a company to be a self contractor but continuing the same contract?

[Red Arrow]

Apologies to begin with if this is covered elsewhere on the forum, but I wouldn't have a clue what keywords to use to search for.

I'm currently working as a full time employee for a company, lets call them company A. They aren't an agency, they do various different types of IT work including contractor work for other companies. I'm currently contracted out to company B at the moment and have been for a few years now. The thing is this contract is coming to an end shortly and it looks like they will not extend it due to a lack of money.

Normally this wouldn't be an issue, I would just end up back in the office and do other jobs there until they found another contract to put me on. But during these hard times that is no longer the case and they will just probably make me redundant as is the case for others in the company.

Now I'm pretty well in with company B, they respect me a lot and treat me like one of their own full time employees. So I want to know what legal issues I have to look out for if I do what I'm about to purpose. I would like to approach company B and ask them if they would be willing to hire me directly as a contractor at a reduced daily rate (thus saving them money and enabling them to keep me on). That if they agree to this I would resign from company A as I no longer have job security there so no point in remaining.

What type of legal issues do I have to look out for because I'm sure company A would see this as me stealing the contract while I was still employed? As I would suggest to company B just not to extend the contract, I would resign and then they can contact me directly after a couple of weeks to take me on with a 'new' contract.

Many thanks.

[doodab]

Your existing contract with company A almost certainly prohibits you from doing this. Best check it.

[Fred Bloggs]

Your existing contract with company A almost certainly prohibits you from doing this. Best check it.

He/she is an employee right now, I am not sure there will be anything stopping it happening.

[thunderlizard]

Your existing contract with company A almost certainly prohibits you from doing this. Best check it.

More likely, company A's contract with company B prohibits it. But I have seen it happen in the past (admittedly, it involved A going out of business). So be aware of the possibility, but don't let it stop you trying.

[Red Arrow]

Thanks for the replies.

If company B were to for example not extend the contract. Then 2 weeks later hire me directly under a new contract and claim it's for a different role, would that possibly get round any legal issues?

[thunderlizard]

No answer to that without knowing what's in the contracts. But guessing, I don't see why a consultancy writing in a "no poaching" clause would have put in "...unless it's for something different of course"

[Wanderer]

It is possible that company B is contractually prohibited from enticing you to come and work direct but if you approach them it may be OK. The only way to really know is to give it a try. I doubt that there is anything enforceable in your employment contract to stop you going to work for Company B. What you may find is that there is an agreement between company A and company B that means company B is not allowed to let you do this.

Alternatively, you may want to hang on at company A - they might make you redundant and pay you to leave!

[northernladuk]

Couple of things to factor in are that Company B use Company A as a service provider. This is very different to hiring the odd contractor here and there. Company B offers a service/skill set company A doesn't have so are not looking for a single contractor. Don't get your hopes up as the business model might all wrong to take you on.

they respect me a lot and treat me like one of their own full time employees.

This is not good at all. If you are going to try it make sure you read up on IR35 first or it probably won't be worth your while going contractor. Even if you do get to contract directly with them being treated as one of their full time guys is the very last thing you want!!

If Company A provides this type of service and doesn't have a handcuff clause in your contract to stop you doing this someone wants shooting.

[Platypus]

read up on IR35 first or it probably won't be worth your while going contractor

Versus the real risk of being unemployed?

Of course it's worth your while being a contractor.

[SueEllen]

If Company A provides this type of service and doesn't have a handcuff clause in your contract to stop you doing this someone wants shooting.

Lots of consultancies and companies put handcuff clauses in contracts that can't actually be legally enforced if challenged in a court. This is because they are ill-defined i.e. the company has so many clients they ban their ex-employee for working for anyone instead of just the particular client project they last worked on. I know a few people who have moved over from employment with their original employer to either a better paid role or contract with the client whose project they were working on before. (I'm actually contracting currently at a client with someone who did just that.)

The only companies who I've heard of that have enforceable clauses seem to be in accountancy and law where they force employees to give 3 months notice and tend to immediately put them on gardening leave if they have another job.