Leaving a contract early to work directly for company - any fees?

[TazCaz]

Hello, quick question - I am currently on a contract (recruited through an agency and being paid through an umbrella company, which is classed as my 'employer'). The company wants to hire me direct. My current contract goes until the end of April. Will the company have to pay the agency a release fee, or be disadvantaged in any way if I am to leave my contract, say, a month early? I'd like to get started with the company ASAP, but I think they may have some concerns they will be penalised if I don't finish my current contract. They are investigating, but thought someone where might know. Thanks in advance!

[caffeine man]

just about every contract I have had in the last 20 years, has had a paragraph, where the agency is entitled to a percentage of your day rate, if you work direct, within 6 months of your contract finish date. Agencies obviously expect clients and contractors to do what you are doing!

[TazCaz]

just about every contract I have had in the last 20 years, has had a paragraph, where the agency is entitled to a percentage of your day rate, if you work direct, within 6 months of your contract finish date. Agencies obviously expect clients and contractors to do what you are doing!

Thanks for the info - does that usually apply even if you finish out your contract with them, or only if you leave the contract early? I can understand a release fee, but a percentage of your day rate for six months is quite cheeky really! I'm with Harvey Nash if that provides any insight?

[caffeine man]

you only legally avoid the agency fee, if you do not work for that client for 6 months or more, once you have left. This only applies to your current client.

[NotAllThere]

There will be a handcuff clause preventing you from working direct for the client for a period of time. The longer that period is, the more likely it would be set aside if it came to court. Read your contract. If it is 1 year, then the chances are it would be unenforceable, if it is 3 months then probably not. Note that's if it goes to court.

The client will certainly have a similar clause in their contract with the agency. That might be more problematic. Usually some kind of compensation to the agency is due - from the client. Will you be going permanent, or is it a fixed term contract.

[TazCaz]

There will be a handcuff clause preventing you from working direct for the client for a period of time. The longer that period is, the more likely it would be set aside if it came to court. Read your contract. If it is 1 year, then the chances are it would be unenforceable, if it is 3 months then probably not. Note that's if it goes to court.

The client will certainly have a similar clause in their contract with the agency. That might be more problematic. Usually some kind of compensation to the agency is due - from the client. Will you be going permanent, or is it a fixed term contract.

I don't actually have a copy of a contract between myself the agency- because that's the first place I would have looked for this information. The only contract I have ever been given is the one that exists between the agency and my 'employer' (the umbrella company), and the only thing this contract says is that it can be terminated with one week's notice. I am on the third contract in this role (an initial 6-month contract and two extensions of 6 months each). April 30 would be the end of my second extension/third contract overall.

In regards to the new role, there is the option of taking on a capped/fixed term two-year contract, or full employment - both of which they are happy to offer, however the fixed term option is the least complicated and won't require advertising the role. So it will be a fixed term contract for two years.

[NotAllThere]

They way I see it, as an employee of a company (in this case a brolly), you cannot be prevented from taking up a position with another employer. Even if it is a "client" of yours. Legally, it isn't.

However, your prospective employer will have a contract with the agency. That may well have a handcuff clause. It is something they have to deal with. Not you.

(I am not a lawyer and have been out of the UK for years, so I'm not up to date on legistlation in this area).

[northernladuk]

You need to speak to the agent and see what they say about it. You will undoubtedly need to buy out of the contract as the agency will be losing money if you leave. If the client wants you they can pay the buy out.