Contract restrictions on going permanent

[luciasdad]

For the past 6 months I have been contracting via an outsourcing company on-site at a bank. The bank have now offered me a permanent position. The outsourcing company are happy for me to go permanent, but my agency and umbrella are raising a stink. My contract states I cannot work directly for the hirer - for 6 months after leaving a contract. As the hirer, in the terms of the contract is stated as the outsourcing company, am I free to work my notice and join the bank, or can the agency come after me? The bank have stated that this is nothing to do with them and they will not get involved. Any ideas where I stand? Thanks

[eek]

For the past 6 months I have been contracting via an outsourcing company on-site at a bank. The bank have now offered me a permanent position. The outsourcing company are happy for me to go permanent, but my agency and umbrella are raising a stink. My contract states I cannot work directly for the hirer - for 6 months after leaving a contract. As the hirer, in the terms of the contract is stated as the outsourcing company, am I free to work my notice and join the bank, or can the agency come after me? The bank have stated that this is nothing to do with them and they will not get involved. Any ideas where I stand? Thanks

Resign from the umbrella - take the job and don't worry about it.

The agency can only sue the companies they have a contractual relationship with - which for the agency is the outsource and the umbrella and for the umbrella is the agency and you.

The umbrella may send you letters but my response would be to ignore things because they won't go to court - that would open whole cans of worms they really wouldn't want to see opened.

[northernladuk]

Eek has probably nailed it as usually there is a chain and you can only go after the next person you actually have a relationship with in the chain. Yours is obviously Client->Outsource->Agent->Brolly->You. So you can't work directly for the outsourcer as the agency will lose their revenue stream and then the handcuff will stand. In this case though you are going direct to the bank, outsourcers loses the role and then has no need of the agency. The role has effectively evaporated so no loss to the agent. With no role there is no handcuff.

The one thing I do think you need to check very carefully is the exact wording of the contract. It will often have more parties in the handcuff than just the client. It's possible it might say the clients client or competitors or something. If it does say more than just the hirer you might have an issue but we need to know the exact wording of the handcuff to be absolutely sure.

The agent won't come after you in any case. They will come after the outsourcer. Have they had anything to say on this. In most cases they strong arm the agent and tell them to let this one drop else risk all the other business the agency has with them. Obviously in that case the agent slinks away and everyone just gets on quite happily.

Another point that isn't clear. Are you giving your notice and going or are you starting with the bank after your current contract has expired? It shouldn't make a difference but the whole situation should be cleaner if it's at the end of the contract rather than midway. The agent will have covered their costs and got the profit they expected at expiration of contract. Mid contract they might actually (but not really) be out of pocket.

Either way Eek is right. This never gets to court. Sometimes the agents client has to pay an exit fee but in the vast majority of times the agent makes a lot of noise and when you don't fold they will go away and the world carries on.

But before waxing lyrical about possible outcomes tell us exactly what is in the contract? We've got to assume it's the same in the contract between agency and outsourcer as well though.

[northernladuk]

Is this the same role you are doing now?

Are you outside or inside IR35?

[eek]

Is this the same role you are doing now?

Are you outside or inside IR35?

Inside

1) he is using an umbrella
2) the end client is a bank (who are all risk adverse for sane reasons).

[Paralytic]

Inside

1) he is using an umbrella
2) the end client is a bank (who are all risk adverse for sane reasons).

Umbrella != Inside.

The fact it was a bank probably means it was never determined - they just stopped engaging outside contractors.

[eek]

Umbrella != Inside.

The fact it was a bank probably means it was never determined - they just stopped engaging outside contractors.

True but when it comes to the question I think NLUK is asking - which is what is the risk of HMRC coming calling because you've switched from outside to permanent - it's utterly irrelevant PAYE has been paid continually.

And I would agree that my current contract is probably outside within UK employment law but I can see why banks are risk adverse because most of their managers are crap at dealing with contract staff in ways that don't make them employees in HMRC's biased eyes.

[northernladuk]

True but when it comes to the question I think NLUK is asking - which is what is the risk of HMRC coming calling because you've switched from outside to permanent - it's utterly irrelevant PAYE has been paid continually.

And I would agree that my current contract is probably outside within UK employment law but I can see why banks are risk adverse because most of their managers are crap at dealing with contract staff in ways that don't make them employees in HMRC's biased eyes.

Eek is correct. Had a complete brain fart there.

The other question regarding the role. If he's been taken on to do a different role then the handcuff is even less valid but the assumption is he's just filling the role he's currently covering. Just thought I'd check.

[luciasdad]

Thanks everybody for all your responses. This is the restriction stated in the contract:
"
The Agency Worker shall not, during the Assignment or for a period of 6 months following the termination of the Assignment, supply their services directly, or through any other firm or Employment Business, to any Hirer for which s/he has carried out Assignments at any time during the previous 6 months.

Intermediary shall use its reasonable endeavours to procure that the Agency Worker shall not during the Assignment or for a period of 6 months following the termination of the Assignment supply the services of the Agency Worker directly, or through any other person, firm or Employment Business, to any Hirer for which s/he has carried out Assignments at any time during the previous 6 months."

The contract ends at the end of this week. But the bank have yet to give me a start date. The bank are happy for me to continue on a short 1 month contract until paperwork and checks completed. The new role is with a different team in the bank.

[luciasdad]

The bank HR is notoriously slow, so I haven't yet handed in my notice to intermediary or agency. I have been assured, but it's now over a month since I accepted. It's all a bit of a mess.