12 Months Restriction Rule (new)

[gonzalex]

Please I need your advice; there are few entries in this forum already in regards to this same topic though i'm not sure how current that advice still is.

So here is my situation - been contacting with company C through agency A1. I've been trading under my own ltd. company.

Going forward, company C decided to not work with agency A1 anymore so all their contracts would be outsourced by another agency - say agency A2. As a result, my contract won't be extended.

Company C expressed their eagerness in keeping in however, I find myself bound by the 12 months restriction clause which sounds as below (per my contract):

3. The Supplier shall and shall procure that the Representative shall
3.1 not during the Contract Period or thereafter for a period of 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 Hirer or End User in any capacity except by contract through the Agency unless the Supplier shall first have paid to the Agency a fee of 30% of the total remuneration including the value of benefits attributed by HM Revenue & Customs agreed to be paid or provided by the Hirer or End User for the relevant period of provision of such services (but not exceeding 12 months) plus VAT;
- here "hirer" is company C

I find this clause fair since normally it would protect Agency's business; however, this won't be the case since the agency won't have a contract with the company anymore. So if I managed to stay through agency A2, I don't regard this situation as "stealing business" from agency A1 and find this clause highly restrictive - it is not allowing me to do business in this case, even though there is no conflict of interest here between myself, the two agencies and the company.

Please advice and thanks in advance.

[v8gaz]

Client made the decision to drop your agency - if they want to keep you, then they should take care of any fallout from their decision. As you point out, there will be no material losses to agency one, as they are no longer a supplier. If the client has to pay them something to keep them sweet, then they should have this discussion.

[tractor]

...

Please I need your advice; there are few entries in this forum already in regards to this same topic though i'm not sure how current that advice still is.

So here is my situation - been contacting with company C through agency A1. I've been trading under my own ltd. company.

Going forward, company C decided to not work with agency A1 anymore so all their contracts would be outsourced by another agency - say agency A2. As a result, my contract won't be extended.

Company C expressed their eagerness in keeping in however, I find myself bound by the 12 months restriction clause which sounds as below (per my contract):

3. The Supplier shall and shall procure that the Representative shall
3.1 not during the Contract Period or thereafter for a period of 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 Hirer or End User in any capacity except by contract through the Agency unless the Supplier shall first have paid to the Agency a fee of 30% of the total remuneration including the value of benefits attributed by HM Revenue & Customs agreed to be paid or provided by the Hirer or End User for the relevant period of provision of such services (but not exceeding 12 months) plus VAT;
- here "hirer" is company C

I find this clause fair since normally it would protect Agency's business; however, this won't be the case since the agency won't have a contract with the company anymore. So if I managed to stay through agency A2, I don't regard this situation as "stealing business" from agency A1 and find this clause highly restrictive - it is not allowing me to do business in this case, even though there is no conflict of interest here between myself, the two agencies and the company.

Please advice and thanks in advance.

The first point to make is that you signed the contract so should expect to be bound by it.

Did you opt-out of the Conduct Regulations? If so, is your opt-out valid; many are not, most agents cannot even tell the difference between the Conduct Regs and the AWR. If you did not opt out or you believe any opt out is not valid then there are very stringent limits on handcuff clauses and they are much less than 12 months. The handcuff clause as written is quite clearly silent on any losses, percieved or actual so it would rely solely on whether you did contract to the same client within that time limit.

[BolshieBastard]

If your agent has been dropped from the PSL, they are not losing any income if you stay at the current client via another agency, irrespective of the contract you signed.

I would make it known to your client that you are happy to stay and ask them to smooth it over with the terminated agency.

[gonzalex]

If your agent has been dropped from the PSL, they are not losing any income if you stay at the current client via another agency, irrespective of the contract you signed.

I would make it known to your client that you are happy to stay and ask them to smooth it over with the terminated agency.

Sorry ... my bad english here - what do you mean by "smooth it over" ?

thanks

[BolshieBastard]

Sorry ... my bad english here - what do you mean by "smooth it over" ?

thanks

Sorry, my bad. By 'smooth it over' I mean your existing agency may not be happy that you are staying at the client and, because they've been dropped, will not get any commission on you. Your client meanwhile wants you to stay.

Its often easier for you if your existing client talks to the old agency and comes to some arrangement with them that you stay with the client and are not threatened with legal action by the old agency.

[BlasterBates]

Agree with the above the restriction clause can only be used to protect a legitimate interest. Since the agency won't be offering an extension. Once the contract has expired you'll no longer be bound by the restriction clause.

From a strict legal point you can't arrange any new contract, which breaks the contract i.e. whilst your contract is running, once the contract has expired the conditions of the contract no longer apply, after all it's expired. After expiration you can do whatever you like.

I would just inform the client you will be going with the new agency and perhaps try and sign it after your current contract has expired.

[Andy Hallett]

Agree with the above the restriction clause can only be used to protect a legitimate interest. Since the agency won't be offering an extension. Once the contract has expired you'll no longer be bound by the restriction clause.

From a strict legal point you can't arrange any new contract, which breaks the contract i.e. whilst your contract is running, once the contract has expired the conditions of the contract no longer apply, after all it's expired. After expiration you can do whatever you like.

I would just inform the client you will be going with the new agency and perhaps try and sign it after your current contract has expired.

I would urge the OP to take proper legal advice as the above is simply not correct. Unfortunately (for contractors) the Bosman ruling does not apply.

My personal advice would be to cut a deal with both the agencies to split the commission and continue to supply.

[northernladuk]

I would urge the OP to take proper legal advice as the above is simply not correct. Unfortunately (for contractors) the Bosman ruling does not apply.

My personal advice would be to cut a deal with both the agencies to split the commission and continue to supply.

Why is that? The handcuff ceases to be fair and just as there is no longer any loss that can be proven?

[BlasterBates]

I would urge the OP to take proper legal advice as the above is simply not correct. Unfortunately (for contractors) the Bosman ruling does not apply.

My personal advice would be to cut a deal with both the agencies to split the commission and continue to supply.

I think it's good advice to get a legal opinion.

Effectively though the agent has been taken off the PSL and is no longer offering the OP work.

Judges apparently take a dim view when an agent is wielding a stick to prevent someone from working, i.e. if the OP does not have a reasonable alternative. It would be a different matter if the agent was offering an extension.

But agreed a grey area, and no harm in trying for an agreement. The principle is basically to prevent the contractor doing the "dirty" on the agent, which would not be the case here.

I'm basing my opinion on this article, i.e. that agency has to be fair about how he exercises the restrictive clause:

So if, when contract renewal time comes up, an agency says that you must accept a lower fee to do the same job for the same client, or that you should do two jobs for the same money, just say that you will go work directly for the client if the agency insists. When the recruitment consultant at the agency threatens you with the restrictive covenant, just cite this article and warn that the consultant is out of line.

I like the idea of offering to split the commission for a few months.