Restrictive covenant issue

[andystephens]

Hi all

I've been contracting with a certain local government client on a rolling 6 month basis. I'm up for renewal next month (and will have been there 3 years). The client wants to renew, however they have just started using a different agency (a corporate decision), and have suggested I move to the new agency or "go direct".

Unfortunately these choices conflict with a restrictive covenant in my contract, which says I cannot return to the client with another agency (or direct) within X months - where X is equal to the amount of time I have been with this client, up to a maximum of 12 months. If I do then the original agency would ask for 20% of my earnings! Unfortunately the client seems to be doing little about it, but if they aren't careful they'll lose me and a dozen other contractors, who won't want to pay the penalty.

This has come about through reasons beyond my control, and I'm reluctant to splash out on legal advise as I'm sure they'll just tell me what I already know: "it is a legally binding contract". I'm wondering if any of you folks have any comments, thoughts or suggested ways around it? From reading other threads about restrictive covenants I get the feeling it's unlikely that it would be followed up if I was "found out", especially given the circumstances behind it, but not sure how brave I am to take the risk! I'm with an umbrella co., if that makes a difference.

Thanks in advance

Andy

[oracleslave]

Am no legal expert but I think you hinted at the answer to your question yourself in that you need to 'splash out for legal advice.' Seldom would an agency try and enforce the covenant for an individual as it often just destroys their relationship with the client in the process. However if there are a bunch of you as you intimate then it sounds like it will be worth the agencies while to pursue their 20%. I think proper legal advice is the only way forward on this as you could end up poo creek otherwise. Also on a 6 month deal the money spent on legal fees up front will be well worth it imho.

[fzbucks]

Hi all

I've been contracting with a certain local government client on a rolling 6 month basis. I'm up for renewal next month (and will have been there 3 years). The client wants to renew, however they have just started using a different agency (a corporate decision), and have suggested I move to the new agency or "go direct".

Unfortunately these choices conflict with a restrictive covenant in my contract, which says I cannot return to the client with another agency (or direct) within X months - where X is equal to the amount of time I have been with this client, up to a maximum of 12 months. If I do then the original agency would ask for 20% of my earnings! Unfortunately the client seems to be doing little about it, but if they aren't careful they'll lose me and a dozen other contractors, who won't want to pay the penalty.

This has come about through reasons beyond my control, and I'm reluctant to splash out on legal advise as I'm sure they'll just tell me what I already know: "it is a legally binding contract". I'm wondering if any of you folks have any comments, thoughts or suggested ways around it? From reading other threads about restrictive covenants I get the feeling it's unlikely that it would be followed up if I was "found out", especially given the circumstances behind it, but not sure how brave I am to take the risk! I'm with an umbrella co., if that makes a difference.

Thanks in advance

Andy

I'm currently being pursued for damages by my ex agency for this - I got found out and they are doing something about it.

[oracleslave]

hence why I said get to Andy get some expert advice. I got pursued as well a few years ago. Luckily the new agency paid my legal fees and the old agency gave up after a while when they realised it was going to be expensive and time consuming for them to get their allegedly deserved %.

[fzbucks]

hence why I said get to Andy get some expert advice. I got pursued as well a few years ago. Luckily the new agency paid my legal fees and the old agency gave up after a while when they realised it was going to be expensive and time consuming for them to get their allegedly deserved %.

Absolutely wasn't arguing with you, more backing up that the agencies do try it on.

[TheFaQQer]

If you are a member of the PCG, then ring their legal advice line.

If not, then you may have a legal advice line through your house / car insurance or some such.