Recruitment Agency Finders Fee - Breach of Contract

[nige4554]

Recruitment contracts seem to be pretty water tight these days. I probably can guess the correct answer which is just pay the fee and be done.
Situation: Contracted via a recruitment agent for 1 year. Did not sign up for another year continued contracting with Ltd company. Previous foreign company got in contact with a new contract direct.
Recruitment company found out, now notified foreign company they are in breach of contract and need to pay equivalent to 6 months salary as the individual was locked in for 12 months working for that recruitment company.

I have heard of this so many times contracting by individuals jumping then returning without the middle man.
How watertight is this these days,
do recruitment companies win the finders fee or tarnish their reputation?
If these are foreign companies is UK law valid abroad?
Working for a Ltd Company as a contractor does breach the initial contract even though not working directly for the foreign company.
I would be interested in views.

[Protagoras]

Sorry, would you please clarify the arrangements?

When you say "Contracted via a recruitment agent for 1 year" ...

are you saying that the initial supply chain was
(a) "ForeignCo - Agency - YourLtd - nige", and that this then transferred to
(b) "ForeignCo - YourLtd - nige"?

How did the Agency arrange that an "individual was locked in for 12 months working for that recruitment company"? Did arrangement (a) identify an individual to perform the contract?

Under (a) did YourLtd agree not to supply services direct to ForeignCo post-contract?

Or does "Contracted via a recruitment agent for 1 year" refer to some other arrangement where you were a Worker (Employee of the Agent or an Umbrella)?

[Paddy]

Recruitment contracts seem to be pretty water tight these days. I probably can guess the correct answer which is just pay the fee and be done.
Situation: Contracted via a recruitment agent for 1 year. Did not sign up for another year continued contracting with Ltd company. Previous foreign company got in contact with a new contract direct.
Recruitment company found out, now notified foreign company they are in breach of contract and need to pay equivalent to 6 months salary as the individual was locked in for 12 months working for that recruitment company.

I have heard of this so many times contracting by individuals jumping then returning without the middle man.
How watertight is this these days,
do recruitment companies win the finders fee or tarnish their reputation?
If these are foreign companies is UK law valid abroad?
Working for a Ltd Company as a contractor does breach the initial contract even though not working directly for the foreign company.
I would be interested in views.

You should have posted in https://forums.contractoruk.com/business-contracts/

However, a contract is a contract and damages can be sought through the English and Welsh Courts. If in the EU, they can get judgment in the home country and transfer to the English and Welsh Courts.

[northernladuk]

Recruitment contracts seem to be pretty water tight these days. I probably can guess the correct answer which is just pay the fee and be done.

I'd say not at all. Many of them are very shabby, particularly around handcuffs and trying to pass tax liability down the chain.

Situation: Contracted via a recruitment agent for 1 year. Did not sign up for another year continued contracting with Ltd company. Previous foreign company got in contact with a new contract direct.
Recruitment company found out, now notified foreign company they are in breach of contract and need to pay equivalent to 6 months salary as the individual was locked in for 12 months working for that recruitment company.

And this is exactly what I mean by being shabby. A 12 month handcuff clause will never stand up. It's just too long and far too generic. The handcuff clause is there to protect the agencies revenue. They put the work in so should rightly get the returns on that investment. It stops you and the client cutting them out in a period they would have normally earned their crust.

A restrictive covenant has to be detailed enough and of a period that would cover the agents income. 12 months does not and a general 'Ive got dibs on him' doesn't either. 6 months is about as long as a defendable time period could be. It's quite plausible you could leave the role and come back in two months to do the same thing so yes, the agent has a decent argument they've lost revenue if you don't go back through then. 12 months? Not a chance, everything will have changed and it will most definitely be a new piece of work.
On the new piece of work topic the covenant should be detailed enough to cover the role you were doing. It's quite possible the client would not have gone through the agent for this new role (and they didn't) so why should the agent have dibs. If it's in an area the agent is working and most likely would have been approached to recruit you then that's nice and specific. Any role across the whole client is not.

So... sorry for rambling.. in a nutshell. Yes there is a breach of contract but it doesn't mean it will stick legally. 12 months for dibs on you regardless of what you doing will never stand up so tell them to do one. The agent knows it and just using bullying tactics. Don't fall for it, they haven't got a leg to stand on .

https://www.contractorcalculator.co....forceable.aspx

[Chris Bryce]

I agree with NLUK, however even if the handcuff clause was valid the most they can demand or would be awarded by a Court is their loss for the handcuff period which would be the markup they've previously made on your fee. This is normally about 11% or so, so unless their markup was massive I can't figure out why they're claiming 50%.

[WTFH]

I agree with NLUK, however even if the handcuff clause was valid the most they can demand or would be awarded by a Court is their loss for the handcuff period which would be the markup they've previously made on your fee. This is normally about 11% or so, so unless their markup was massive I can't figure out why they're claiming 50%.

They might be claiming 33% of what they would have charged the client e.g. client pays £750 a day. Contractor gets £500, agent gets £250. Contractor sees £500 a day as his rate, so if he is asked to repay £250, he sees it as half his rate.

The devil is in the detail of the story. For example he seems to jump from talking about himself to talking about a third person, and we’re missing details of how long between finishing with the agent and starting direct, how the idea of going direct was handled, and why the agent appears to be going after the end client, not the contractor. (I always find these stories interesting when you spot what the poster has left out, or the ambiguity in what they have written)
If the agent is going after the end client, then the contractor is not involved. The argument is between the agent and the end client, and the wording of their contract.

[WTFH]

Just another query from me… the OP refers to the commission as “Recruitment Agency Finders Fee”
I really feel like there’s a lot missing from this story, in terms of the OP’s background/experience