Buying out contract for second gig?

[imightbewrong]

I'm coming to the end of my first gig in a couple of months - it looks like there's quite a bit of work here, and I think they will want to renew (as would I). Currently am through an agent - not sure what there % is. Now the question is - should I consider negotiating a buy-out of the next contract? Would have to be a 6-month buy-out at 20% (according to the contract). Is this a worthwhile thing to consider if I think there's at least another 12 months work here. Is this more hassle than it's worth? Do people do this?

Did a bit of searching - couldn't find much on this.

[Scrag Meister]

Not sure why you would want to do this, unless there is a large rise in direct rate from the client.

If the rate is similar then no logic to this at all, if the relationship between you and your agent is working ok.

[northernladuk]

The question is does the client WANT you direct? Most companies see agents as a necessary evil so they don't have to mess about with the recruiting, contracts and all that. The agent has to be there for a reason or else they would have got shot of him a long time ago.

I would also think it would be difficult to buy an agent out as you don't really know how long you will be there....

You are also exposing yourself to a level of risk.. What if they bin you off in 3 months and you paid the agent? You are gonna have a right bunfight.

[Wanderer]

should I consider negotiating a buy-out of the next contract? Would have to be a 6-month buy-out at 20% (according to the contract). Is this a worthwhile thing to consider if I think there's at least another 12 months work here. Is this more hassle than it's worth? Do people do this?

It can be done ("going direct" is the term to search for), however, it's up to the client to decide if they want you to go direct or not.

Believe it or not, some clients WANT to deal with an agency for various reasons. If they have a lot of contractors then they have a single supplier to pay. It also means that if the employment status of the contractor is questioned then it's the agency that gets hit, not the client.

Did you opt out of the Conduct of Employment Regulations? If you did not then this restricts the buy-out clauses that the agent can hold against you and you may be able to have this clause struck out. If you did opt out then you should read and understand the regs and consider withdrawing the opt-out (effectively opting in) at the next opportunity.

The other option is for your LTD company to cease trading and distribute all it's money to the shareholders (ie you), then you form a new company (pheonixing) to engage with the client direct. The agency only has a contract with your old company which has ceased trading so they can't get anything out of it.

You don't know what the agencies agreement with the client is either, they may come after the client asking for a buy out fee too. That is between the client and the agency, nothing to do with you but if the agency raises a stink then it will come crashing down on you personally.

You should probably get legal advice if you decide to shaft the agency.

As northernladuk says, the bottom line is that it pretty much depends on what the client wants to do and they may tell you it's none of your business and to use the agency....

[rootsnall]

There should be a 'buy out' clause in the agent to client contract. It isn't the done thing and when I've mentioned it the agency in question didn't seem to like it at all. In the ones I've seen, after say a year the buy out wasn't too bad, I thnk it was 3 months of the agents cut. I started on the process at one client, the agency got a bit bolshy and the client lost interest once it got slightly difficult for them. You would need to have a good relationship with the client to attempt it, and work out who exactly would be shelling out up front, and how you'd recoup the money. The client will probably expect to reduce what they pay in total, or why would they bother.

[imightbewrong]

Thanks guys - that clause is there (@20%) which is what made me wonder, and about half the contractors on this team are direct. I've opened renewal dialog now - will see where it goes - will probably no go for going-direct.

[virtualm]

I personally wouldn't bother, it depends on how greedy you are. It will mean setting up an account with your client, and it also depends on what their payment terms are - remember most businesses work on a 90 day payment term. But it depends what your relationship is like with the client and if they will pay you in say 3-5 days after submitting invoice as via the agent for example.