Contract "Handcuff clause"

**northernladuk** · 26 June 2012, 07:34

So you are Agency-->Consultancy--> Cient?

If this is a case I created a couple of threads discussing the technicalities of such a chain and are you a hidden permie at the client as well as the consultancy and so on.

You need to read the contract very carefully as I think the devil will be in the details on this one. Your contract will generally only handcuff you to the agent and not let you work for his customers, clients and competitors so the customer of the customer isn't really covered but the consultancies agreement with the client may be a little more robust.

Thing is... bottom line here... they are going to get rid of you, period. For the consultant or agent to make a handcuff clause stand up they are ultimately going to have to prove loss. There is no loss, you have been binned. You go direct and the consultant and agent will be a little unhappy but it sounds like they are already battling with the client. One thing maybe to watch out for is the consultancy losing all his business and then trying to invoke the handcuff for a payoff out of sheer bloody mindedness. I am not sure if the client will back you up here or let you go for the hassle factor. Does sound like he is on your side. You will have to work that one out.

I am thinking here then, (assuming you are one of the binned ones) you politely advise the consultant of your intention to go direct once your contract is over and then leave quickly while he calms down. Let them duke it out for awhile till it calms down and then happy days.

If you are thinking of just jumping ship direct because some of the other guys are being binned and not you I would reconsider.

**cojak** · 26 June 2012, 07:39

Did you opt-in or opt-out with the agency?

If in then you can go back, if out then you can't.

(As an added bonus: did you meet the client before opting-out?)

**Gentile** · 26 June 2012, 08:34

Originally posted by redeye5 View Post

Hi Guys,

I have been working for a consultancy as a contractor for one of their end clients. The consultancy put me onto one of their agency books for invoicing purposes even though the agency did not find me. The same arrangement is in place with a few of the other contractors. I invoice the agency and they pay me and my contract is with the agency not the consultancy.

The consultancy and the client have had a fall out over rates recently and the client have decided to get rid of some of us contractors as they do not want to pay the markup. They are happy to keep us on direct if we want to.

I am interested to know what your opinions are on this. I have the usual 6 months clause in my contract.

Thanks

Sounds like ClientCo has shot themselves in the foot a bit here. I always honour any non-compete agreement I have with an agency that has found me work. In your situation, though, where by the sounds of it the agency were basically getting money for old rope and hadn't done any actual work to get you placed, I might be tempted to continue working for the ClientCo I'd found through other means if the agency had fallen out with them and if I still wanted the work. Sure, the agency could potentially sue - you can sue for anything, it's a free country - but they'd need to balance the risk of doing so against the real possibility that a Court would find against them. A Court might well find that the situation whereby you were willing to work through the agency, but the agency couldn't uphold their end of the bargain by maintaining their relationship with ClientCo that would be necessary for you to be able to do so, might mean that you were under no obligation to turn down work just because the agency couldn't keep up their end.

Bottom line, though, if ClientCo is messing the agency/consultancy around, you can bet they'll mess you around too. All things being equal, I'd be tempted not to let myself be used as a pawn by any party to the proceedings. Unless the agency have been rubbish in other respects, such as demanding large increases from the client, I'd be tempted to take the fact that the relationship has broken down as a red flag for the client. When people don't pay some of their bills, or try to negotiate people down in bad faith after a deal has been agreed, that's not a client you want to loan money to in the form of giving them your time and expertise on tick.

**Gentile** · 26 June 2012, 08:47

PS: You say the consultancy has fallen out with the Client. And you also say your contract is with a third-party agency, not with the consultancy. Have you checked whether the agency would be willing to deal with the Client direct?

**Graemsay** · 26 June 2012, 12:16

I had a chat to a solicitor about this a couple of years ago, after being messed around by an agency who used a handcuff clause to squeeze my rate down.

In general, non-compete clauses aren't enforceable unless you possess specific trade secrets or business knowledge that are central to the company who's employing or contracting you. As a programmer (I'm assuming that's what you do), you're ultimately pretty interchangeable.

If you're being paid for the duration of a non-compete period then it might be a different matter, but I've yet to come across a company that does that.

My suggestion would be to have a chat to a solicitor and see where you stand. If he says roughly what I did (albeit in a more legalistic and expensive fashion), then I'd discuss it with the agency or consultancy. The ideal solution would be going direct without upsetting them, as you might need to work for them again in the future.

**redeye5** · 26 June 2012, 19:27

Hi,

Thanks for your replies. Just to answer some of your questions.

1. I work through a ltd company that has a contract in place with a the agency. The agency did not find me the job. I was put onto the agencies books by the consultancy for invoicing purposes.
2. The clients agreement allows for me to go direct cutting out the consultancy/agency hence they are talking to me about it.
3. I don't think the client are messing me around. They are simply cutting their costs but are genuinely interested in keep me on within their budget.

I spoke with the PCG and their advice was if I go through with this and the agency purse it they can try and get a injunction put against me stopping me form working at the client. However they will have to prove their reasons for this and I can argue against it and say its unfair. My grounds would be I was no longer going to get work through the agency so I was out either way at the client via agency. I gave the agency time to find me alternative employment which they didn't. 6 months is too long a period to wait it restricts competition etc.

**Wanderer** · 26 June 2012, 19:36

Originally posted by cojak View Post

Did you opt-in or opt-out with the agency?

If in then you can go back, if out then you can't.

(As an added bonus: did you meet the client before opting-out?)

Cojak's questions are important. Did you sign the opt out?

Actually, thinking about it, the opt out couldn't be valid as redeye5 was already introduced to the client before they were introduced to the agent so the opt out can't be valid and the 6 month restraint of trade couldn't be enforced.

If the client want to pay you direct then just go for it.The agency will know they are bang to rights and they will just try a load of bluff and bluster on you. DON'T enter into ANY further discussion with the agency.

If the agency didn't introduce you to the client then it's totally unreasonable that they should seek to enforce a restraint of trade on you.

**redeye5** · 26 June 2012, 20:44

No I did not sign an opt in/ opt out clause so that's not in place. I think based on the posting here and PCG advice i'll give it a go and see what happens.

Thanks for all your help.

**Wanderer** · 26 June 2012, 21:59

Originally posted by redeye5 View Post

No I did not sign an opt in/ opt out clause so that's not in place. I think based on the posting here and PCG advice i'll give it a go and see what happens.

The opt out we are talking about is discussed here.

If the agency didn't manage to trick you into signing it then the 6 month restraint of trade in your contract is unenforceable. End of story.

Contract "Handcuff clause"