What Can Agency Do?

[Dynamic]

A friend got a contract for a consultancy via an agency and worked for the client of the consultancy.

When the contract ended, he was offered a new contract by the client of the consultancy directly although the agency's contract had asked not to work for the consultancy or client directly for at least 12 months.

Now if this friend accepts the offer of the client, what could the agency do against him? complain to court?!

There are 2 aspects to this 1) legal 2) relationship

1) legal; it would be legal for the contractor to work for the client via the same agency or another agency; not directly

2) relationship: contractor's relation with the consultancy would be ruined perhaps so probably no future work will be offered to the contractor by the consultancy.

[Wanderer]

When the contract ended, he was offered a new contract by the client of the consultancy directly although the agency's contract had asked not to work for the consultancy or client directly for at least 12 months. Now if this friend accepts the offer of the client, what could the agency do against him? complain to court?!

This is why you should never sign the "opt out" that agencies press you to sign.

The 12 month restriction is a controversial one, you could argue that it's so broad that it's a restraint of trade and therefore illegal. I'd be interested to hear if any agency has ever brought and won a case in this situation. I would be inclined to take the contract and never speak to the agency again (even if they threatened me with legal action).

As a last resort, you could cease trading with your company and form a new one to take on the new contract. The agency only has a contract with your company, not you personally so once your company has been shut down they can't do bugger all.

[Dynamic]

Thanks for your email.

What would "opt out" mean in this case?

The contract also says that that contractor can't work directly with the client, however, if worked through another agency or Company that would be OK!

I think that would even ease this situation e.g. by asking another contractor, who has a Ltd, to go through his Company and sign the contract with the client that wouldn't even breach the original contract!

[PSK]

It will, as ever, depend on the detail of the contracts with the agent and the consultancy but if your friend accepts then he/she may well be in breach of contract with either or both the agent and the consultancy, both of whom may have a legitimate interest to protect and who, if the contracts are written and incorporated correctly, may have the means to enforce those rights.

I am aware of some case law (mostly employer employee but there is some that is company to company) that have found some agreements in restraint of trade to be enforceable up to 12 months and some debate about longer ones. It all depends. As well as the legal position, the commercials will probably be important - will either the agency or the consultancy choose to enforce whatever rights they may have?

[Dynamic]

in what sense do you say "it will"?

The contract clearly says that the work will not be restricted if done via a third-party; agency or another company.

You mean the agency or consultancy can claim that e.g. we lost income as a result of the indirect work of the contractor for the client?!

[PSK]

When I read your first post, I didn't see much about what your friend's contract with the agency and the agency's contract with the consultancy said so I said it would depend on exactly what these said which it would.

If you are saying that your friend's contract with the agency expressly permits him to do follow on work for that client without restriction and without payment to the agenc/consultancy (or if the contract were to be completely silent about working again with the end client or if he or she didn't opt out) then great and you've probably answered part of your own question.

If your friend's contract does contain restrictions then it will depend on exactly what they say. Your friend will want to be sure they've read all of what would form the contract (sometimes there's reference to separate terms and conditions, framework agreements, registration forms with terms and so on) and understood all the contract's contents.

You might want to ask your friend to read it again as you say in your later post "The contract clearly says that the work will not be restricted if done via a third-party; agency or another company." - I'm surprised an agency would go to the bother of actively putting something like this in and also that they'd draw a distinction between third-parties and the end client - if the agency and the consultancy aren't fussed about getting any money if your friend cuts them out for follow on work, in my experience they'd not normally be fussed about allowing a competitor to supply your friend's services to the client but not allowing your friend to go direct. The reason I'm saying this is that I wouldn't want your friend not to have misunderstood what the contract really says given contracts are written in a language that appears to be english but is usually legal english.

The other reason I'm a bit sceptical about your friend's reading of the agent's contract with your friend is that I've never had an agreement with an agency nor a consultancy associate agreement myself that doesn't seek to protect the agent or consultancy's commercial position by seeking to restrain the contractor/associate working with the end client in the immediate future. They don't always legally achieve what they want but I've never seen what looks like an express permission to cut the agency/consultancy out. Perhaps that says more about the types of agents and consultancies I've worked with (usually big and commercially and contractually aware).

Good luck.