Agency vs direct, and 2 years with the same client?

[Bumfluff]

I'm just coming to the end of a contract with a client, who want to extend me for a further 12 months. I've just completed 3 x 6 month engagements with them, followed by a 1 month contract while I sort out the issue described here.

I knew the client at the start, so was hired directly, but asked to work through an intermediary who managed all of their contractors. After my first stint I asked to remove their "handcuff clause" because it was unfair given that they hadn't recruited me, which after a bit of wrangling they did.

Now after 18 months I told the client I would only re-sign on a direct basis (partly because it would make it easier for me to ask for a higher rate, but also because the way their contracts were written led me to believe they might make me IR35 caught - or suggest that I might be). The agency refused, unless the client paid them 50% of my year's day rate!!

They're still refusing, even though the client has tried to pressure them a little. I'm not sure what to do now, I really enjoy the project but 2.5 years in a series of contracts that might be hard to defend against HMRC doesn't especially appeal. Do any of you have any ideas / suggestions? Should I just get out now, or give in and consider myself IR35 caught from now on....? Does the agency have any right to demand that fee given that they didn't introduce me to the client?? Does it really make any difference either way if I stay with the agency vs going direct (I suppose that depends entirely on the contract terms)?

Any feedback or suggestions would be gratefully received...

Is this Hays ?

[Wanderer]

If you managed to get them to withdraw the handcuff's clause what are they objecting too?

I think the handcuff clause is in the contract between the agency and the client....

[keninparis]

[QUOTE=Bumfluff;1415439]Hays/QUOTE]

Worse agency I've dealt with IMO - very poor (that's if I'm allowed a viewpoint).
Our conversations didn't last too long. For those here who understand (never be compromised by sales people)

[mcskiver]

The agency is called AMS - Alexander Mann Services I think.

The handcuff clause is between the agency and the client, though the client didn't seem to be aware of it until we tried to negotiate directly! I ensured the handcuff clause was removed from my contract on the basis of them not introducing me to the client.

I've forwarded the link to the relevant legislation, with an explanation, to the client's legal dept and they still seem to think they can't question the handcuff clause...

It couldn't have come at a worse time for me really. I've just arranged (yesterday) a mortgage on the basis of an impending long-term contract, which I don't have because of this dispute.

I'm not sure how I can continue with this contract offer via AMS though, because the contract (and as I understand it, the overarching handcuff clause) are in themselves pointers to IR35. I know it's all about your actual working practices, but it's never that clear cut in reality, so having a contract that goes against you is just another difficulty I could do without, especially after such a long time with one client.

Anyway, thanks again for all of the feedback ladies and gents...

[northernladuk]

It couldn't have come at a worse time for me really. I've just arranged (yesterday) a mortgage on the basis of an impending long-term contract, which I don't have because of this dispute.

They gave you the mortagage based on the contract or you took it on the basis you can afford it because you have a long term contract?

The latter isn't a very good idea anytime. Contracting is too volatile to use this to mitigate risk surely.

[mcskiver]

They gave you the mortagage based on the contract or you took it on the basis you can afford it because you have a long term contract?

The latter isn't a very good idea anytime. Contracting is too volatile to use this to mitigate risk surely.

Err...not sure of the difference between those two? Affordability for me is based on contracting yes, but not the specific rate in this contract. If I took a drop in rate I could still afford the mortgage, but I'd have to apply all over again delaying the whole process.

I used a contractor specialist mortgage broker, who use my contract rate and my current contract as the basis of a mortgage. Seems to be standard practice, as high-street mortgage lenders weren't interested.