Buying out of a long contract

[kaiser78]

I had problems quitting an agency even when they owed me 3 months money for a client requiring SC clearance...and still didn't get around it. Ended up doing a companies house search for the agency directors' home address and indicating that I could drop the written complaint to them personally on xmas day if that was convenient. They paid and I handed in my notice.

Looks like it did the trick though.

[Wanderer]

1. Can the agency legitimately stop me from leaving their contract and signing my own contract with the end client?
2. If they can, what would be a reasonable fee for them to charge to buy out of the contract early?
3. Has anyone had any success negotiating a buy out fee?

Welcome!

1. It depends on what is written in your contract, but the answer is possibly yes. It's also important to consider if you signed an opt out and if it was done in a valid way, ie before the introduction or supply to the client. Even if the agency have a valid opt out then the restrictive covenant in your contract may be unenforceable if it is too draconian though you would need legal advice on challenging this as an illegal restraint of trade.

2. The agency regulations don't define what is a "reasonable" fee but they do restrict the restrictive covenants in your contract to 14 weeks from the start or 8 weeks from the end. You could tell them you never signed a valid opt out and offer them 8 weeks worth of their margin (which probably about 7-20% of your fees for 8 weeks work) to release you from the restrictive covenant. I'll tell you something for free though, they will have much bigger balls than you and they will play hard ball on this so you would need the backing of a solicitor specialising in contract law to argue your case.

3. Yes, but here's the kicker. This usually only works when the client are willing to work with the contractor to ditch the agency. Also, the client may or may not have their own restrictive covenant with the agency and although this is limited by law if you didn't sign a valid opt out, the client may or may not be willing to start a fight with the agency about it. Clients generally don't give a tulip about a contractor who doesn't like his agency though they may work with you to oust the agency if you are having trouble getting paid or the agency margin is excessive.

But before you start on this, understand that many clients won't take contractors on direct because there are legal issues around employment rights that they can avoid by using an agency as a middle man. You may negotiate to get rid of your agency only to find that the client won't deal direct with you, however you may be able to get an agency replace your old agency for a fee of 5% or so.

What is your motivation for wanting to cut out the agency? Do you know what percentage of the contract value they are taking?

[psychocandy]

Can't believe people get this idea in their head that they can just ditch the agency to save themselves a few quid (or so they think). Forget the idea unless client really wants to do this. Trying to get client to drop the agency and go direct just makes you look like an annoying tit.

In most cases, it might sound like a good idea to you but in 99% of the cases, the client just wont want to do this. Mainly because they cant be arsed and using the agency is just easier and allows them to crack on with minimal hassle.

[Support Monkey]

That's cheap

Mine says £15K buyout (or a 6 month wait, like yours).

Have you ever thought about just paying the agency the £3.5K and going direct with an increase in your rate?

Everyday, however i go through an agency who supply to another agency who are on the end clients PSL so even if it was £1 i cannot get on their PSL so cannot go direct.

I could have cut out the first agency and gone to the one on the PSL but they would not pay the rate

[Support Monkey]

Can't believe people get this idea in their head that they can just ditch the agency to save themselves a few quid (or so they think). Forget the idea unless client really wants to do this. Trying to get client to drop the agency and go direct just makes you look like an annoying tit.

In most cases, it might sound like a good idea to you but in 99% of the cases, the client just wont want to do this. Mainly because they cant be arsed and using the agency is just easier and allows them to crack on with minimal hassle.

Tis true

[JamJarST]

Even if you do get on the PSL of your client be prepared for quite a hit on your cash flow, all my end clients have had the agency on 90 to 120 day payment terms!

[Support Monkey]

Even if you do get on the PSL of your client be prepared for quite a hit on your cash flow, all my end clients have had the agency on 90 to 120 day payment terms!

also true, I asked about going direct while on an NHS contract and they said yes you could but you will have a hell of a job getting your money and they were quoting 120 day payment terms

Its a nice idea and for some it works well but for most it creates more issues and you need to jump through Hoops to get it, unless you can go direct from day one with the right TCs