Agency paying less than agreed client rate (skimming off top)

**Cirrus** · 5 November 2016, 13:18

Originally posted by BogieStewart View Post

what is the protocol for discussing day rates with client?

Why would you discuss this with the client?

Do you discuss other financial matters with them?

Your logic seems to be that you agreed a figure which doesn't directly relate to some other formula that might or might not represent the discussions between the agent and the client. Apart from the fact this is not your business, you shouldn't jump to the conclusion that the figures on a 'rate card' represent the money that actually changes hands. There may be discounts for example.

There's no harm in mentioning this to your client although check for any provisions in your contract (if you have one). But don't expect them to put a flashing blue light on and start saving you from evil agents. You're a contractor, not an employee.

**SueEllen** · 5 November 2016, 13:20

Depending how long you have been at the client you can inform the agency you know they are skimming more off than the client thinks and if they don't agree to give you the rate agreed you will tell the client what they are up to.

Then give them a couple of days and tell the person at the client who pays the agency what the agency is doing and say you can give them proof if they need it.

**SueEllen** · 5 November 2016, 13:23

Originally posted by Cirrus View Post

Why would you discuss this with the client?

I've been on a site where one contractor got p*ssed off with their agency skimming off extra money so they disappeared for a few days. The client was well aware of what was going on but said it was between the contractor and the agency as they didn't have an agreed fixed rate.

On other sites I've been on there has been an agreed rate with the agency so everyone knew what everyone was on plus the agency margin.

**malvolio** · 5 November 2016, 13:26

Umbrella or YourCo. If the former then most likely the £300 is the agency fee and the 15% covers the Employers' NICs the brolly pays on your behalf but wither way it's not your problem.

As has been said, you worry about your rate (which is the amount you agreed to take), nobody else's. Apart from anything else you have no idea what goes to make up the project budget.

**stek** · 5 November 2016, 13:27

Originally posted by BogieStewart View Post

Agency called me up about a job, said they put me forward at £250/day. I said I had another potential job paying more. Agency said the most the client will pay is £275/day so I said fair enough and signed contract.

Since working at the client I have seen the budget for my project and the client is paying £300/day +15% commission. Now, I don't care about the 15% commission, that's none of my business, but what I do care about is that the client thinks they are paying me £300/day but in fact the sneaky recruiter is taking £25 of this.

Has anyone else been in this situation?
Do I have any recourse?
I've signed a contract that has no day rate specified on it, just an email from the recruiter confirming the rate, along with start times and notice period.

I am assuming the recruiter will say tough, you signed the contract. But can I alert the client about this, or what is the protocol for discussing day rates with client?

Any advice would be greatly appreciated.

You were happy with £275 so what's the problem?

**northernladuk** · 5 November 2016, 13:28

Unless you are on a fixed margin, which you should have asked, then most people are in this situation. The agent holds a pot of money, the two of you negotiate a price, you make a decision to sign or not sign. You signed. That's that for now. You find out the agent is taking too much so at renewal you tell him you want more or you are walking.

That's the top and tail it. Complaining to the client when you accepted it is more likely going to end in tears for you. It's between you and the agent. The client might want to know if they are paying 500 quid and getting a 300 quid contractor but for 25 quid they are just gonna think you are a trouble maker.

It's part of the game. Sometimes you negotiate well and sometimes the agent gets a little too much.

**northernladuk** · 5 November 2016, 13:31

One point though. Project budgets aren't always related to what the client pays the agency and what you get paid. A project budget will also probably count a permie at the same rate which obviously doesn't compare to what they get paid. Be very careful about throwing the teddy out of the cot unless you are absolutely sure the two figures you see are directly related and apply to you.

**northernladuk** · 5 November 2016, 13:43

Another thing to consider. It's not always about the percentage. The agent makes a lot less in 15% of 300 than he does from 15% of 500. I'd say 15% on your rate it pretty darn good. I think the consensus of around 12% on a 500 rate is a fairly acceptable margin for a general contract.

As I said. The agent has done the work getting you in for the first gig so he should rightly drop his margins for extensions so push him hard at renewal time.

**northernladuk** · 7 November 2016, 17:54

Originally posted by logozz

I once had a moron Agency CEO who asked me not to tell the client that he was actually paying me less than the rate they were under contract with the client to pay.

NATURALLY I discussed this with the client first thing and the fraudulent agency (yes! it is fraud to lie about circumstances in a negotiation that creates a gain for the perpetrator and a loss for the victim! - and the contract can very easily be declared null and void!) got stricken off the PSL faster than they could spell "contract breach"!

Cool story bro....

Agency paying less than agreed client rate (skimming off top)