Conflict of Interest clause

[IBM Agent]

You would be in bother here if you went and worked directly for the CC's client.

The fact that you've continued to work for their client, accepted payment and possibly had timesheets/confirmation of works acknowledged by their client post expiry of your last written contract, would arguably be deemed as an acceptance on your part to continue working under those previous/existing terms, thus legally binding you. When I say 'you' usually this would be limited to your supplier company (i.e. your Ltd org) but your clause does cite specifically any personnel supplied - you would be on a sticky wicket.

Many years ago I once worked for a mainstream agency, before I saw the error of my ways, who had a team dedicated to making the lives of absconded contractors a misery who went to work directly for their client. The agency threw literally millions at it and it was a very large profit center for the business. I would imagine the CC would have no hesitation is suing you, not utilising your services ever again, and would definitely NOT seek damages from their client - business is too slack in this market on the whole to go biting the hand that feeds the CC regardless if their client has breached the terms by taking you direct..

[Tarquin Farquhar]

Pedantic legal question not necessarily indicative of my own feelings of right and wrong here: if the contract between CC and YourCo Ltd says that neither YourCo Ltd nor its employee Joe Sixpack will work for FTSE, and you Joe Sixpack sign that contract in your capacity as Director of YourCo Ltd, but later on Joe Sixpack does go and work for FTSE, is that not a breach of YourCo Ltd's contract with CC, i.e. they failed to stop him? It may also be a breach of Joe Sixpack's implied contract with YourCo Ltd, but what is YourCo Ltd going to do about that, sue him? The agency CC can't sue him, because he has no contract with them.

My point is, how can your Ltd Co contract with an agency bind you personally?

[Manic]

Pedantic legal question not necessarily indicative of my own feelings of right and wrong here: if the contract between CC and YourCo Ltd says that neither YourCo Ltd nor its employee Joe Sixpack will work for FTSE, and you Joe Sixpack sign that contract in your capacity as Director of YourCo Ltd, but later on Joe Sixpack does go and work for FTSE, is that not a breach of YourCo Ltd's contract with CC, i.e. they failed to stop him? It may also be a breach of Joe Sixpack's implied contract with YourCo Ltd, but what is YourCo Ltd going to do about that, sue him? The agency CC can't sue him, because he has no contract with them.

My point is, how can your Ltd Co contract with an agency bind you personally?

Exactly. Where YourCo also employs John Washboard who then goes and works for FTSE and you as director of YourCo doesn't stop him, then it gets even sillier.

[Pondlife]

Good work on the names folks.

It also depends on whether Billy Waistband has opted out of the agency regs or not. If they are not opted out (i.e. are covered by them), then there is a limit of something like 14 weeks as a restriction on going direct.

IANAL of course.

[XLMonkey]

My point is, how can your Ltd Co contract with an agency bind you personally?

It binds you personally if the agency wrote the contract terms correctly, because you will have signed both in your capacity as a company director, and as Joe personally.

Now, it is true that if you wind up yourco, and then set up a newco, and then go to work for the client, then you can avoid the problem.

But... when you start to wind up the company, there is a statutory (3 month?) notice period operated by Companies House to catch exactly this scenario, during which time the agent can still sue it for breach of contract. If/when they do, then Joe as the director will still be liable.

The long (long, long, long) and short of it is that, if correctly worded, you can be caught by these clauses.

[XLMonkey]

What is the exact clause?

This clause may be enforceable, provided that you signed it BOTH on behalf of your company, and yourself personally (i.e. two separate signatures). But it is very poorly drafted (I should know, I draft contracts for a living).

If you signed only on behalf of your company, then its less likely to be enforceable, since you personally are not a signatory. You could set up a newco and then work through that.

[XLMonkey]

Many years ago I once worked for a mainstream agency, before I saw the error of my ways, who had a team dedicated to making the lives of absconded contractors a misery who went to work directly for their client.

I would sooooooo love to get the name of the agency. Pretty please.