Restrictive Covenant in Contract - Expiration and Termination

[ace2k7]

Hi, Long time lurker here.

I need some advice on a situation.

I am a Ltd Co consultant/contractor and have been working at a client site for the past 12 months. My contract is/was extended, but I have refused to extend through the current agency.

Lots has happened and without going into it all it boils down to this.

I asked for a rate increase (very much justified). The client could not do so directly as I was already on top amount allowed for my role but they agreed it was deserved. Agency refused even though their margin is ridiculously high. Anyhow, wouldn't have been a problem, but when the agent declined, instead of doing so politely, he decided to blame my lack of contribution. Ahem. Right.

As you can imagine, I was very angry. Client was as pi$$ed off as I was. An "employee" (i.e. perm) of the agency who also works in the same project team was then used as a conduit to discuss my contract even though it has bugger all to do with him. He raised it in the presence of others on at least 2 occasions and I had to tell him to STFU - confidentiality clearly not in his vocabulary. I then found out he was going around spreading a false rumour I was leaving and accepted another role (and even named the other company!). All BS. Now I'm incensed. I write email to the management of agency to complain, I basically get called a liar, and get a political response worthy of David Cameron.

Anyhow - I inform the client of all the events and that I will not extend, not because of rate, but because of the unprofessionalism, treatment and lack of acknowledgement or apology. Client desperate to retain me, suggests I go via different agency. Current agency is told I am not extending by client and they cite the restrictive covenant of 6 months. Client asks them to waive, they refuse to back down. Agency then starts sending me a number of threatening emails quoting the clause, then forwards it their solicitor, solicitor sends me a email telling me they will "pursue it through the UK courts" and follows with a letter. I haven't even breached anything yet, nor has the client officially confirmed the other agency route. Simultaneously, agency "tells" client to contact me on at least 2 occasions to reconsider extending. Its all a mess.

To put it into context, I created an itinerary of all the correspondence, in a 6 week period I have had contact from 6 different people (including 1 lawyer, 1 managing partner,1 partner, 2 associate partners etc.) on 25 occasions via different channels. 3 phone calls and 3 threatening emails in past 48 hours. Haven't been sleeping well, if at all for weeks, and utterly stressed. I describe this as harassment.

I should add - I am opted in to the Conduct of Employment Agencies/Business' regs.

So essentially, it boils down to these options:

1) Terminate the contract outright before it ends - i.e. material breach. No specific clause that covers these in my contract - but can I use harassment in common law or something to terminate outright? As I understand it, restrictive covenant would not apply (although tbh I just want to do this on principal now as client has basically been scared off unless I can disprove their 6 month claims).

2) As I am opted in to Agency regs, am I right in thinking the most they could enforce anyway is 8 weeks? Which makes their clause and their threats unlawful? The wording of the clause concerned me somewhat as it refers to "fees" between hirer (client) and employment business. It makes no mention of worker (me / my ltd co).

3) Just walk away.

Reluctant to go down without a fight given how I've been treated.

Any advice appreciated. And I will be trying to get a hold of a solicitor later today (the guy from Egos who blogs here is first on my list).

With the termination - contract ends in a few days, so on very tight timelines.

[NotAllThere]

If it's a big agency:

Skip the monkey, talk to the director of the agency. The directors have a longer view - they want to retain a relationship with the client. They want to make money out of you. The agent is panicking. Perhaps you're his only contractor and he's worried he won't meet his targets and will get the boot. Instead of negotiating, because he's a moron, he resorts to threats. It wouldn't surprise me if the solicitor's letters were written by him.

If it's a little agency:
Point out to them that there continued behaviour will lose them further business with the client. If they behave themselves, then they can use that as future leverage to be, e.g. preferred supplied.

The client could pay you eight hours for seven work. The client could, if they wanted, pay you more anyway. The client could put heavy pressure on the agency if they wanted to. Do not think that the client's interests necessarily lie in supporting you over much.

Finally - yes, consult a lawyer.

[SlipTheJab]

Just go sounds like both the client and agent are a bunch of twunts...

[mudskipper]

re 2) - there will also be a similar clause in the upper contract (client/agency) so even if yours is invalid, the client is unlikely to want the hassle.

If it's stressing you out, do you really want a fight? What's the market for your skills like - can you get a new gig easily?

[ace2k7]

re 2) - there will also be a similar clause in the upper contract (client/agency) so even if yours is invalid, the client is unlikely to want the hassle.

If it's stressing you out, do you really want a fight? What's the market for your skills like - can you get a new gig easily?

Been told by the client there is no such clause in the head agreement.

Is my "8 week" rule thinking correct?

Market is decent, but I actually like the role (and the client) as it gives me a fair bit of working flexibility.

[ace2k7]

If it's a big agency:

Skip the monkey, talk to the director of the agency. The directors have a longer view - they want to retain a relationship with the client. They want to make money out of you. The agent is panicking. Perhaps you're his only contractor and he's worried he won't meet his targets and will get the boot. Instead of negotiating, because he's a moron, he resorts to threats. It wouldn't surprise me if the solicitor's letters were written by him.

If it's a little agency:
Point out to them that there continued behaviour will lose them further business with the client. If they behave themselves, then they can use that as future leverage to be, e.g. preferred supplied.

The client could pay you eight hours for seven work. The client could, if they wanted, pay you more anyway. The client could put heavy pressure on the agency if they wanted to. Do not think that the client's interests necessarily lie in supporting you over much.

Finally - yes, consult a lawyer.

This is exactly what I tried. I emailed the Managing Director of the firm and he was probably the worst of the lot. Think its well past that point to be honest. Client did put a lot of pressure on the agency but as they are a big Investment Bank (read: bureaucracy), they had no flexibility on the rate (agency margin 30%+) and expected agency to cut it. Its not even about the rate anymore.

The annoyed the client now to the point where I know they will consider terminating the head agreement altogether. Which Is probably why they are so pi$$ed at me.

Like it says above, twunts.

[NotAllThere]

If the legal advice gives you 8 weeks, then go for that, and defend any legal action. If you can show that you've behaved reasonably and the agency has behaved unreasonably, that usually works very much in your favour. As it stands it looks like the agency is unreasonably restricting your ability to work.

One way of getting around dictated rates is to work fewer hours for the same money. I know of one case where the managers wanted a specific consultancy, but the rates were seen by the purchasing department as "too high". The managers and the consultancy agreed 6 hours work for 8 hours pay. The managers got the work done, the consultancy got their rate and the purchasing department were none the wiser.

I had a client threatened with legal action from agency. The agency eventually withdraw, having wasted thousands on legal fees. Not only did they lose any chance of ever working with the client again, later, when I was in a hiring position, I took great pleasure in explaining why I wouldn't be availing my client of their services.

[TheFaQQer]

1) Terminate the contract outright before it ends - i.e. material breach. No specific clause that covers these in my contract - but can I use harassment in common law or something to terminate outright? As I understand it, restrictive covenant would not apply (although tbh I just want to do this on principal now as client has basically been scared off unless I can disprove their 6 month claims).

If you cannot give notice, then breaching the contract on the grounds that the bigger boy was mean to you first doesn't hold much sway in the courts, unfortunately. If you can give notice, and want to, then give notice.

2) As I am opted in to Agency regs, am I right in thinking the most they could enforce anyway is 8 weeks? Which makes their clause and their threats unlawful? The wording of the clause concerned me somewhat as it refers to "fees" between hirer (client) and employment business. It makes no mention of worker (me / my ltd co).

If you aren't opted out, then you can go direct after an eight week break from the end of the contract, or fourteen weeks from the start - whichever is the later date. That doesn't mean that you would only be liable for any penalty that the agency tries to apply for only eight weeks, though. Take the break and no-one pays - even if there is something in the upper contract between agency and client, they cannot charge anyone any fees.

3) Just walk away.

That's always an option.

Reluctant to go down without a fight given how I've been treated.

Any advice appreciated. And I will be trying to get a hold of a solicitor later today (the guy from Egos who blogs here is first on my list).

With the termination - contract ends in a few days, so on very tight timelines.

If the contract ends in a few days anyway, then why bother terminating it and breaching the contract? Either walk away, extend, or take eight weeks off and go back via another agency.

Although you missed option 4 - change agency and either get away with it, or fight the clause in the courts. Restrictions like this are always judged on an individual basis, so what has worked for someone in the past won't necessarily work for you this time. In my opinion, a six-month restriction on a twelve month contract isn't unreasonable though.

Good luck - let us know what you decide and how it pans out.

[The Spartan]

Sounds like some of the hassle I've had lately, personally if I were you I'd just see out the contract till the end and line something else up as it'd be a whole lot easier.

[ace2k7]

If you cannot give notice, then breaching the contract on the grounds that the bigger boy was mean to you first doesn't hold much sway in the courts, unfortunately. If you can give notice, and want to, then give notice.



If you aren't opted out, then you can go direct after an eight week break from the end of the contract, or fourteen weeks from the start - whichever is the later date. That doesn't mean that you would only be liable for any penalty that the agency tries to apply for only eight weeks, though. Take the break and no-one pays - even if there is something in the upper contract between agency and client, they cannot charge anyone any fees.



That's always an option.



If the contract ends in a few days anyway, then why bother terminating it and breaching the contract? Either walk away, extend, or take eight weeks off and go back via another agency.

Although you missed option 4 - change agency and either get away with it, or fight the clause in the courts. Restrictions like this are always judged on an individual basis, so what has worked for someone in the past won't necessarily work for you this time. In my opinion, a six-month restriction on a twelve month contract isn't unreasonable though.

Good luck - let us know what you decide and how it pans out.

Thanks for the response. Re 1) - not really terminating because they were "mean" - I honestly think this is harassment. The amount of correspondence from the number of people, threats, false rumours etc. I won't be breaching though. If my solicitor says its possible, I will pursue this. If not I let it run out.

Opt 2 is looking most likely for now.

Opt 4 isn't an option as client won't move on this until I've had the legal battle.


Got a hold of Roger (Egos) and he is looking at it now. Fingers crossed.