Advice for Agency -> My Ltd -> Client Agreement

[Peter Loew]

Hi all,

I've recently found myself in the position of potentially being able to supply resource to an established tier 2 / 3 consultancy that has contracts with major telcos, financial institutions, retail etc. all over the UK.

To do this I have used my network and established good relations with a small but reactive agency based in Liverpool St who said they'd need to review my T&Cs and that they'd be interested in being my 'preferred supplier'.

The agreement I'd like to reach is that me (or my Ltd) act simply as a 'referral company' where I make a margin on any resource I supply to my client, via my agency. So it would look like this:

Agency -> My Ltd -> Client

Where the Client would come to me with a job spec and I would review and pass onto agency. The agency would have no direct relationship with my client. So in summary, agency makes their margin, I make mine and client makes theirs.

- Has anybody done this kind of thing before?
- Is there anything I should be aware of?
- Are there any major risks and how can I protect myself against them?
- Can anybody tell me what kind of contracts / agreement documents I need to have in place and if these templates are available online for me to use?
- What insurances do I need to buy?

Thanks,

P

[Wanderer]

- Are there any major risks and how can I protect myself against them?

I'd have some clause in there whereby if they recruit someone for you, you only pay if they are still working for you in 3 months time.

Why not just put your own ads on Jobserve with a tag "No Agencies"? Or will the agency really add value here.

[The Wikir Man]

If you have much business going through you (I assume that agency will invoice your co, then you invoice client), then you will probably go over the FRS threshold (assuming you are on FRS VAT).

What happens if someone in the chain does bust - make sure you are not going to end up with their bills (e.g. contractor comes after you for money rather than to bankrupt agency).

No other immediate thoughts.

[The Agents View]

Your success is likely to be limited to be honest - Any agency worth their salt, would want line contact - and that's not to be awkward to you - it all comes down to the chinese whispers effect - You could easily end up with agencies looking for something completely different to the line manager by the time its been passed from line manager to HR to you (given that you're talking job Specs, I assume you're talking about bringing in Human Resistance?).

Essentially what you're saying, is that you want these people to work through your limited company? Therefore the relationship is:

Ltd Co. -> Agency -> Your Limited co. -> Client ?

Why don't you simplify this, and simply do a deal with an agent for a kick back on every placement? I know you hate letting go of the control, but you're on the verge of having a fairly serious conflict of interest here as well are you not?

[ratewhore]

Why don't you simplify this, and simply do a deal with an agent for a kick back on every placement?

In my experience the pimps take the piss i.e. max of £100 vouchers for each placement.

I ran a couple of contractors through my Ltd for a couple of years. No major dramas, however, I would make sure you get your payment terms squared away on both sides, unless you have the readies to factor payments happily.

[The Agents View]

Just to give you a brief comparison - assuming a rate of £400 pd +, I'd probably be looking at giving you an average kick back of about £1000 per placement, once those people have been there for say, 30 billed days (at a margin of about £80 odd per day).

I would probably look to weight it - so earlier placements pay slightly less, but as the volume expands, you charge a little more - to my mind that keeps you committed to the relationship - given that I make (percentage wise as commission) more money, the more I generate, you're guaranteed commitment (ultimately, each £ billed is worth more to my pocket, the more I've billed - if that makes sense?).

HTH/gives you food for thought?

[Ravello]

Not sure what sort of volumes you're likely to be dealing with, but do you really need an agency to source the candidates in the first instance? If I was in your situation I would want the relationship to be:

My ltd. > Client

I can't see an advantage in including an agency - there are plenty of keyword search programs available online