Being forced to go via agency from being a direct contractor.

[Seasider]

Just after a quick piece of advise on this situation as a first pass:

I work as a direct IT contractor (no agency involved) for a client for 9 months and have just a signed a three month contract extension which expires at the end of April 2015. The client has just made a business decision to force all contract staff to have to work through their recruitment agency of choice. I don't have problem with this, that is their perogative.

The recruitment agency has written to me saying this however, saying this:

OPTION 1

Under this model contractors would transfer to *Agency*. *Agency* will place the contractor on their payroll and would assume day-to-day responsibility for managing the contractor. As compensation for loss of revenue the fee, or margin, that *Client* is charged on a weekly basis( minus *Agency* charge of (£17) will be paid directly to you on all days worked by the contractor.

This agreement is offered for the inclusive duration of the current assignment or a period of 13 weeks from 2nd March 2015 – whichever comes first.

Option 2 - One-off Payment

*Agency* will offer a one-off payment to you as compensation for transferring your technology contractor. This fee would be similar in principle to temporary to permanent pricing agreements. The actual fee offered will be calculated on an individual basis and will be worked out according to the projected duration of the contractor’s current assignment with *Client*. The fee is calculated as the total of 13 weeks of margin that your organisation would be due, paid as one lump sum. The contractor then transitions to *Agency* upon agreement of this fee.

The rate they are offering is £17 per day less (to cover the agencies "costs" I guess) than what I get when contracting direct for the client and this amount is on the signed three month contract extension which runs till the end of April.

Four main questions then:
1) If I choose option 1 can they get away with this forcing me to accept a lower rate even though I have a signed and counter signed contract in place until the end of April? They are effectively getting £17 per day for doing more or less nothing.
2) I really don't understand Option 2, can someone demystify this?
3) Can they force me to make a decision by the 30th January? This doesn't seem much time to weigh up my options.
4) Is this an employment or other type of business law issue? Should I seek professional advise on this before comitting to anything?

Thanks!

[SimonMac]

Four main questions then:
1) If I choose option 1 can they get away with this forcing me to accept a lower rate even though I have a signed and counter signed contract in place until the end of April? They are effectively getting £17 per day for doing more or less nothing.
2) I really don't understand Option 2, can someone demystify this?
3) Can they force me to make a decision by the 30th January? This doesn't seem much time to weigh up my options.
4) Is this an employment or other type of business law issue? Should I seek professional advise on this before comitting to anything?

Thanks!

1) Yes, however its not forcing you as you are freely within your rights to walk away from the contract
2) Pass, it sounds like an agency to agency payoff, are you a limited company billing the end clinet at the moment?
3) What is the notice period in your contract? I assume its a week and they have just given you a week notice on the old contract
4) Its a contract issue, the client is asking to renegotiate the terms, you can either take it or leave it (see answer 3)

[AMH]

how are you currently setup? Ltd Company? inside/outside IR35, etc.

Bit confused that the Agency will put you on their payroll.

[BolshieBastard]

I'd be onto the client about this. I dont see why you should end up with a rate cut for the client to take on the agent and possibly other handcuff clauses.

When I was asked to go back to a former client, I was told to name my rate and the client would ensure this is what I got not the agent taking a margin off it.

Of course if the client doesnt play ball, your option is to sign or walk away.

[Seasider]

My answers to your questions:

2) Yeah I think you are right, this would apply to contractors who go through an agency as they are forcing them over to the new one as well. Yes I'm a limited company billing the client direct.
3) My notice period is one month on my current 'direct' contract.

1) Yes, however its not forcing you as you are freely within your rights to walk away from the contract

2) Pass, it sounds like an agency to agency payoff, are you a limited company billing the end clinet at the moment?
3) What is the notice period in your contract? I assume its a week and they have just given you a week notice on the old contract
4) Its a contract issue, the client is asking to renegotiate the terms, you can either take it or leave it (see answer 3)

[Seasider]

Currently setup as a Ltd company billing the client direct.

how are you currently setup? Ltd Company? inside/outside IR35, etc.

Bit confused that the Agency will put you on their payroll.

[JRCT]

*Agency* will place the contractor on their payroll and would assume day-to-day responsibility for managing the contractor.

I like this bit. You should phone the *Agency* at 9am every day and ask what they want you to do today.

[GillsMan]

Watch out for handcuff clauses. Anything that says that you can't go direct or via another agency (more likely than going direct) for a period of X months is a mickey take when you've brought them the business, not the other way round.

[northernladuk]

Just after a quick piece of advise on this situation as a first pass:
4) Is this an employment or other type of business law issue? Should I seek professional advise on this before comitting to anything?

Thanks!

Twice in one post... Nice!!

[TheFaQQer]

Twice in one post... Nice!!

Try not to let it effect you too much