Contracts where there is a middleman who wants a cut

[css_jay99]

I came across a situation several years ago where where I was approached about a contract opportunity by someone I have worked for in a distant past. He wanted a cut of the daily rate. Though the (final) rate was good I declined for 2 reasons, (1) I felt that's not legit and (2) I can't Imagine how that cut can be reflected in the company accounts except paid out of taxed (Personal income/Dividend hence a larger impact).

Fast forward to now, I am in a similar situation, person wants a cut. I would like to say no but I am just about coming out of a year long self imposed benching following a 12yr stint at 1 client.

I guess the question is if this happens a lot in contracting

[Lance]

It happens a lot in business.
Accounting wise it's cost of sales.
It's legit in some circumstances (eg. it's not a corrupt contract award).

The question is whether the referrer gets an ongoing percentage for ever. Or if you go for xx per day for the 1st 3 months, and everything after that is yours. Does he have influence over the client? If you just stopped paying him will you lose the contract?
Maybe you should bung him a few £k for the initial contract?

[northernladuk]

I guess the question is if this happens a lot in contracting

Getting some money for passing something on happens a lot everywhere, not just contracting. If you've got something that someone wants then it's good business to get something for it. It could be goods, knowledge or opportunities like this.

Like any situation like this there is a level if piss take though and that's where you have to negotiate, swallow it or walk away. Personally I think a contractor taking a cut of the rate for hearing of a gig is a little on the tight side, depending on the cut asked for. Taking an agent level cut is out of order as the agents actually do something for that cut, factoring, managing the clients and the contract etc. To charge a % cut for doing absolutely squat once the contract is in place is a step too far for me.
I'd be looking at it like a finders fee and nothing more. It's cost me nothing, I'm helping someone else out and I make a few hundred quid.

I can imagine people want to screw the contractor for every penny they can but I just think this is too much, particularly if its someone that's got no choice but to take it. Maybe it's good hard business but just doesn't sit right taking the piss out of people that are in a hard place or don't have a choice.

I've seen two instances where a contractor was taking the piss out of another and they had no idea how it worked. When it came out the person charging the contractor didn't look very good. Whether they cared I don't know but it was clearly a piss take.

Despite what I said above I don't think contractors taking daily cuts is very common at all and I'd be leaving it if I had a choice. Depends on the monies involved.

[_V_]

A middleman who wants a cut, I think that's never happened before, said no recruitment agency ever...

[ladymuck]

I'd pay a one-off fee, akin to a bottle of plonk or a dinner out, but not an ongoing cut of the rate. Are they subbing you to the client and the money passes through them first?

An agency, as NLUK mentioned, does a bit more than just an intro so you understand why they take a few bob off what the client pays.

[Fraidycat]

I'd pay a one-off fee, akin to a bottle of plonk or a dinner out, but not an ongoing cut of the rate. Are they subbing you to the client and the money passes through them first?

An agency, as NLUK mentioned, does a bit more than just an intro so you understand why they take a few bob off what the client pays.

For permie roles where there is no on going overhead just a one off intro. Agents can get well over £10,000 finders fee.

So this intro is worth a few thousand at least, depending on how lucrative the contract actually is and how long the OP is likely to remain on the bench earning £0.

[northernladuk]

So this intro is worth a few thousand at least, depending on how lucrative the contract actually is and how long the OP is likely to remain on the bench earning £0.

How do you know? OP hasn't mentioned any figures. A few thousand for a 3 month gig at £400 a day is starting to push agent rates so IMO that's far too much just to pass on a role you know is open.

[ladymuck]

I've never asked for anything back on sharing lead information. I just hope that, if the role comes off and everyone is happy, the favour will be returned to me one day.

I guess, and the gin habit, is why I'm not a filthy millionaire like AtW

[css_jay99]

...So clearly from all said above, things like this happens. It's a long term contract, inside IR35 and the cut is throughout the whole gig. I plan not to stay long since inside IR35 but it just does not sit well with me at all that someone is benefiting off me in that way.

[eek]

...So clearly from all said above, things like this happens. It's a long term contract, inside IR35 and the cut is throughout the whole gig. I plan not to stay long since inside IR35 but it just does not sit well with me at all that someone is benefiting off me in that way.

It's inside IR35 - so the end client should be paying the person not you.

I would run away while pointing out it's illegal to charge people for finding you work (if it was a B2B outside IR35 contract my viewpoint would be rather different).