Restrictive covenant question

[andystephens]

Thought it would be useful to provide the contract wording around this area:

The Supplier shall and the Representative shall not, so far as is applicable at law, either during the Assignment or thereafter for a period equivalent to the period of supply under this agreement (but not being less than three months nor more than 12 months) either directly or indirectly (whether under a contract of services or a contract for services or through any third party) provide the Services provided (or substantially the same as those provided) under this Agreement to the Client or End User except:

i) By contract through <agency name>; or
ii) On the Supplier paying to <agency name> a fee of 20% of the total remuneration agreed to be paid for the services by the Client or End User for the relevant period of supply (but not exceeding 12 months) plus VAT.

[andystephens]

Thanks for all the replies so far. I can see the point of the clause if I was to return to that client with a different (rival) agency, or direct, but would the clause also apply if I was to return as a permie (with no agency involved)?

Presumably it's not unreasonable that the client could make a case around how much the agency has made out of me for the last 5 years, and negotiate a lower get-out fee?

Thanks again
Andy

[TheFaQQer]

I've always wondered how they can enforce this? How would they know if you went back there with another agent?

Client tells them? You put it on your CV and they see a copy of it? They ring you, you forget and say "oh I'm unavailable, I'm still at XYZ..."? A mate mentions it to an agent?

Just a few ways that it could happen.

[TheFaQQer]

A one year restriction may or may not be accepted by a court (unlikely in my view but it has happened). What the court cannot do is change it to 6 months (say). Either it is upheld or struck out (in whole or part).

A decent write up: http://www.glovers.co.uk/news_article273.html

Ah - you're right. I was getting confused with the courts being able to sever parts of the clause to make it reasonable.

I wonder whether you could get away with wording it as "3, 6, 9 or 12 months" and then letting a court sever it to whatever they think is reasonable.

[curtis]

I've always wondered how they can enforce this? How would they know if you went back there with another agent?

[ASB]

A one year restriction would be unworkable, but if it went to court, then it wouldn't be struck out completely, but replaced with something more reasonable.

A one year restriction may or may not be accepted by a court (unlikely in my view but it has happened). What the court cannot do is change it to 6 months (say). Either it is upheld or struck out (in whole or part).

A decent write up: http://www.glovers.co.uk/news_article273.html

[TheFaQQer]

I don't know what goes on between client and agency but I'm assuming they must have to sign something similar?

It would be significantly more unlikely not to be there than to be there - most agencies will have that in their standard contract with the client.

A one year restriction would be unworkable, but if it went to court, then it wouldn't be struck out completely, but replaced with something more reasonable.

Talk to the client, and mention that they might have to look at the contract with the agency. See what they say, but I would expect that somewhere, someone is going to have to negotiate with the agency to pay something.

[andystephens]

Who signed the restrictive covenants would be a start?

The restrictive covenant was simply a clause in my contract which I received by email. It was over 5 years ago, and seem to remember not having to phyiscally sign anything but instead reply along the lines of "I accept....". Subsequent renewals have been a verbal acceptance with the agency, although I also have to complete an online acceptance form on my umbrella company's website (which I'm assuming counts as acceptance of the contract).

I don't know what goes on between client and agency but I'm assuming they must have to sign something similar?

[Paddy]

Hi

I've been contracting with the same agency at the same client for over 5 years now. The contract has a 12 month restrictive covenant on it.

I've been considering jacking in contracting and returning to permanent work, and a position has come up with the current client. I would like to know if these restrictive covenants are only there to stop you taking on a contract at the same client through a different agent, or would it also apply in this situation of returning as a permie to the same client?

I'm with an umbrella company if that makes a difference (or offers a way around the clause!).

Thanks in advance
Andy

Who signed the restrictive covenants would be a start?

[VectraMan]

It'll affect the client and not you. The client will have a similar clause with the agent, so if they're prepared to pay the 25-30% of your first year's salary that agents typically charge for permanent staff, then there won't be a problem. Of course this may make you more expensive than other candidates.

[andystephens]

Hi

I've been contracting with the same agency at the same client for over 5 years now. The contract has a 12 month restrictive covenant on it.

I've been considering jacking in contracting and returning to permanent work, and a position has come up with the current client. I would like to know if these restrictive covenants are only there to stop you taking on a contract at the same client through a different agent, or would it also apply in this situation of returning as a permie to the same client?

I'm with an umbrella company if that makes a difference (or offers a way around the clause!).

Thanks in advance
Andy