Umbrella to Ltd - Restrictions

[NotAllThere]

A previous agency told me that they did not allow contractors to switch from ltd to umbrellas in mid contract. I was not planning on it so I did not bother arguing.

"Did not allow". Right...

[Ticktock]

My switch will be at the end of the first 12 month contract, and I'll sign a new 12 month contract.

The restriction isn't anything to do with the Agency (although of course they have that also) - I'll still be using the same agent. It is purely the umbrella company T&Cs.

To quote:
"13.1 You hereby agree that you shall not (without the prior consent in writing of the Company) for a period of 6 months immediately following the termination of your employment with the Company, indirectly or directly or through an agency or otherwise and whether on your own behalf or in conjunction with or on behalf of any other person, firm, company or other organisation, (in any Capacity whatsoever), (a) be employed or engaged in, or (b) perform services in respect of, or (c) be otherwise concerned with the Customer for whom you were carrying out an Assignment, provided always that the provisions of this clause 13.1 shall apply only in respect of Services with which you were either personally concerned or for which you were responsible whilst employed by the Company during the 12 months immediately preceding the termination of your employment. "

Unfortunately, below that is states:
"13.3 The provisions of clauses 13.1 and 13.2 above shall only apply if you have opted out of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 in respect of that Assignment."

And of course I was stupid and rushed to get started, so signed the Opt Out... I'll know better next time.

[moggy]

My switch will be at the end of the first 12 month contract, and I'll sign a new 12 month contract.

The restriction isn't anything to do with the Agency (although of course they have that also) - I'll still be using the same agent. It is purely the umbrella company T&Cs.

To quote:
"13.1 You hereby agree that you shall not (without the prior consent in writing of the Company) for a period of 6 months immediately following the termination of your employment with the Company, indirectly or directly or through an agency or otherwise and whether on your own behalf or in conjunction with or on behalf of any other person, firm, company or other organisation, (in any Capacity whatsoever), (a) be employed or engaged in, or (b) perform services in respect of, or (c) be otherwise concerned with the Customer for whom you were carrying out an Assignment, provided always that the provisions of this clause 13.1 shall apply only in respect of Services with which you were either personally concerned or for which you were responsible whilst employed by the Company during the 12 months immediately preceding the termination of your employment. "

Unfortunately, below that is states:
"13.3 The provisions of clauses 13.1 and 13.2 above shall only apply if you have opted out of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 in respect of that Assignment."

And of course I was stupid and rushed to get started, so signed the Opt Out... I'll know better next time.

I wouldn't worry about it. they can't hold you to that - looks more like they have ripped off an agencies contract and haven't even bothered to read their own t's and c's. Can't see any contractor using them if they tried to enforce that. name them.

[Taita]

I wouldn't worry about it. they can't hold you to that - looks more like they have ripped off an agencies contract and haven't even bothered to read their own t's and c's. Can't see any contractor using them if they tried to enforce that. name them.

Absolutely agree. Clause ripped out of an agency contract. Cannot see how changing your style of business or appointing another accountancy firm (new brolly) can be prevented by the existing brolly. As another poster has stated, their legitimate business interests are not, in any way, tied into the supply of your services to the ClientCo, unlike the agency.

[Wanderer]

"13.3 The provisions of clauses 13.1 and 13.2 above shall only apply if you have opted out of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 in respect of that Assignment."

And of course I was stupid and rushed to get started, so signed the Opt Out... I'll know better next time.

Woops. But did you opt out before you were introduced to the client? If you were already introduced then you can argue that the opt out wasn't valid.

[grant32]

The employment t&cs I received from one of the major umbrellas (can I mention them?) just this week also have these restrictions (only applies if opt out). I will ask them if they can remove this clause but I'm expecting resistance.

[SueEllen]

Woops. But did you opt out before you were introduced to the client? If you were already introduced then you can argue that the opt out wasn't valid.

Makes no difference - umbrella companies don't provide work seeking services so the OP can easily point out the opt-out is null and void as the regulations don't apply.

Personally I would say nothing, ignore the umbrella company and then if they continue to harass you, let them take you to court.

They are extremely unlikely to and if they do they would rely on the restraint of trade clause being an "Employment Business" when instead they should be arguing it using something else.

[Taita]

I wouldn't worry about it. they can't hold you to that - looks more like they have ripped off an agencies contract and haven't even bothered to read their own t's and c's. Can't see any contractor using them if they tried to enforce that. name them.

Agreed. Clauses copied from an agency contract. In the case of the agency they probably can enforce to protect their vested interest in supplying you (contractor) to the client.

However, umbrella cannot claim a vested interest as they do not supply your services to the client. No money changes hands between client and umbrella if you are going through an agency so they have no direct business interest to protect. Clause is unenforceable but they maybe awkward about releasing your last payment to you!

On the other hand if they are trying to say that you cannot supply your services to the agency other than through them, the wording is wrong but they may have a point although you would have to get a particularly stupid judge to uphold the brolly's view!

Anyway what has the 'opt out' to do with the brolly.....they are not subject to agency regulations????? Apologies for repeating the pronouncements of others but this sort of shoddy, badly considered, badly implemented contract documentation gets my goat!

[Wanderer]

Anyway what has the 'opt out' to do with the brolly.....they are not subject to agency regulations?????

The umbrella is just passing on the opt out request from the agency. It's up to the person who does the work to choose if they want to opt out - see section 32(9).

I guess that one of the reasons that agencies want people to go LTD or umbrella is that if they payroll their workers then it is impossible for them to opt out...

[Andy Hallett]

I've never heard of a Brolly stopping a worker switching to a limited company, as long as they do the right notice etc.

A lot of Umbrella companies have sister company accountancy firms now for PSC's, if you are really concerned see if you can switch to company supported by them.