Extension -- getting rid of the agent

[aj1977]

Currently on a tulip rate and have a potential extension coming up.The client has unofficially agreed to getaway with the agency and do direct with me so that they can meet the rate rise i am asking for.The client knows that I will walk away if i don't get the rate rise.The contract between my LTD and the agency says that I cannot go direct with the client for 2 years after the current contract and if at all i decide to go direct, i need to pay 20%(looks like apparently this is their markup) to them for every day i work direct with the client.

I assume similar clause is there in the contract between the client and the agency.

How do i handle this situation...Will the agency come to know if at all i go direct.The client could say we don't want to extend me to the agency and then get into a direct relationship with me...any thoughts??

[Ardesco]

The contract between my LTD and the agency says that I cannot go direct with the client for 2 years after the current contract and if at all i decide to go direct, i need to pay 20%(looks like apparently this is their markup) to them for every day i work direct with the client.

It's an unenforcible clause and will never hold up in court. If they had said three months it would have been ok, but not two years. Also are you IR35 caught or not? If IR35 caught they can't put in a restriction of trade clause.

Have a chat with PCG legal helpline to clarify if you are a member, or <insert random law specialist here> if you aren't.

The biggest problem that you will have is the agency will threaten to take you client to court and the HR dept is likely to just get rid of you and have nothing else to do with you because it's the easy way out. Companies useually don't want to get entangled in court proceedings.

[aj1977]

It's an unenforcible clause and will never hold up in court. If they had said three months it would have been ok, but not two years. Also are you IR35 caught or not? If IR35 caught they can't put in a restriction of trade clause.

Have a chat with PCG legal helpline to clarify if you are a member, or <insert random law specialist here> if you aren't.

The biggest problem that you will have is the agency will threaten to take you client to court and the HR dept is likely to just get rid of you and have nothing else to do with you because it's the easy way out. Companies useually don't want to get entangled in court proceedings.

I am not caught by IR35.I doubt very much that the agency will mess with the client as they are in their PSL and don't want to jeopardize their potential future business prospects...

By the way is there any means the agency will come to know that I have gone direct with the client...other than the client or other contractors spilling the beans to the agency?

[BrilloPad]

I do feel a bit sorry for the agency here - though the 2 years seems ridiculous. They found the job and put you in there. you must have known what you were signing up for?

I seem to remember that if you have a ltd company then it is assumed by default you have taken legal advice?

[TheFaQQer]

If you didn't opt out before meeting the client then you can go direct after 8 weeks.

[aj1977]

If you didn't opt out before meeting the client then you can go direct after 8 weeks.

I think i had opted out!!

[TheFaQQer]

I think i had opted out!!

In writing? Before being introduced to the client / interviewing?

I would be surprised if the agency could prove that....

[SueEllen]

I assume similar clause is there in the contract between the client and the agency.

Nope otherwise the client wouldn't be trying to go direct with your ltd.

Oh and on your opt out, did you opt out before the interview or after?

[MrRobin]

As much as agents can be greedy swines and not exactly the most popular group of people on this board (perhaps second in the despicable league only to politicians) I must ask why are you desperate to get away from them? Is it purely for the rate increase? Don't forget that most agencies provide more convenient and regular payment schedules than clients and are taking on an element of risk that they will pay you but the client might not.

As Brillopad said, they did place you in the job in the first place, but understand that the same margin should not hold for an extension, since the extra work involved for them is minimal. In light of the restriction on your current contract and potential problems it may cause can you not just negotiate with the agency to cut their margin? OK they are not going to cut it to 0% but perhaps your client can up the rate to meet the take home you want.

[Denny]

If you didn't opt out before meeting the client then you can go direct after 8 weeks.

Provided you didn't sign anything that presumes that you can't. Unfortunately, most EBs have wised up to this now. So If you've signed away this right to go direct with the client (and the chances are you have) then the client is still legally obliged to pay the EB a one off transfer fee or a continued mark up for the duration of the restriction period.

You're right about the reasonableness of the restriction clause though. Anything over a year is unreasonable. Six months is acceptable. Up to a year may be result in a court battle if the client and EB wish to make an issue of it. A transfer fee is normally the way most would sort this out.