Reply to: Contract Advice....Please!

[Wanderer]

Out of interest, can I opt back in, sit tight for 8 weeks then go direct?!

No.

You can opt in, finish the contract (but not terminate it early) and then wait until 14 weeks from the beginning of the contract or 8 weeks from the end of the contract (whichever is longer) then you can go direct without paying the agency a fee.

If you want to go direct earlier, then the agency is allowed to charge you a fee to cover the commission they would have earned in the 14 weeks or 8 weeks.

[Wanderer]

Having found the opt-out notice, one point states that...

"Further that the Individual is free to withdraw from this Opt Out notification at any time by giving not less than a week's written notice to the Employment Agency/Business. However, where notice is given during as Assignment it will not take effect until the individual stops working on the Assignment."

You can give notice that you will opt back in at any time, but "the notice shall not take effect until that person stops working in that position". I would read this to say that if you finish a contract with the client then you have stopped working in the position. You could potentially start a new contract the next day and opt-in. It sounds like your agency agrees with this interpretation.

You can read the law here and try and figure it out. Section 32(9) is the opt-out that you elected to take.

1. If you go direct with the client they are paying less money to have you work for them. You should speak to the client and see if they will do your dirty work for you in dealing with the agency (including paying off the agency as required).

2. Don't forget that although you are named on the contract, it is between your company and the agency - not you personally. If it comes to it, you can just cease trading with that company and start a new one. Don't let them bluff you, they can't come after you personally.

[Fresh Air]

Out of interest, can I opt back in, sit tight for 8 weeks then go direct?!

Having found the opt-out notice, one point states that...

"Further that the Individual is free to withdraw from this Opt Out notification at any time by giving not less than a week's written notice to the Employment Agency/Business. However, where notice is given during as Assignment it will not take effect until the individual stops working on the Assignment."

Any thoughts.....

[Fresh Air]

Thats what I originally though (but managed to mess-up my post!)

So it would be better if I were on a 3 month contract....

Ive jus read your post again and compltetly got this the wrong way round!...I wasn't expecting the agency to be able to take 20% of possible future income from the time spend being direct with the client.....that puts a whole different slant on things

[Fresh Air]

Say you bring in revenue of £100,000 over the course of 12 months working directly for the client after you leave the agency. The agency would expect £20,000.

Thats what I originally though (but managed to mess-up my post!)

So it would be better if I were on a 3 month contract....

[Fresh Air]

Oh dear, that was a bit of a mistake then.

Chances are that the Agency will just drop the matter. If they don't, you could argue that it's a restraint of trade and therefore can't be enforced. Tell them if they take it to court and your Co wins then it will void this contract term for all their contracts so they will never be able to enforce it again. It raises the stakes and they will probably let it go.

Alternatively, you can take all the money out of your company and form a new one. The agency can only enforce the contract against your old company and they will be flogging a dead horse because it will have no money.

Out of interest, can I opt back in, sit tight for 8 weeks then go direct?!

[lje]

I think thats what I meant to say before!

If the contract length = 12 months, agency will be expecting 20% of the contract value not 20% of the 'margin' they have on top of what myco gets

Is that what you meant?

Say you bring in revenue of £100,000 over the course of 12 months working directly for the client after you leave the agency. The agency would expect £20,000.

[Fresh Air]

I'm afraid not. They are not talking about 20% of the agency's expected income but 20% of the overall value of the contract.

I think thats what I meant to say before!

If the contract length = 12 months, agency will be expecting 20% of the contract value not 20% of the 'margin' they have on top of what myco gets

Is that what you meant?

[Fresh Air]

The opinion on this board is that even if you think you're opted out, you're opted in. I wonder what a court will decide on that one?

Who is your contract with - i.e. who is the supplier. You or your ltdco? Because you could always close down your ltdco and start up a new one.

Closing down and starting again may not be an option as although the contract is between the agency and supplier (my ltd co), I am named on the paperwork

[lje]

The 20% refers to the total remuneration agreed to be paid by the Client for the relevant period of provision of the services (but not exceeding 12 months). So I'm assuming this means if it is a 12-month contract, my company would have to hand over 20% of the agencies income expected from the Client during that 12-month period (not 20% of what they pass on to me )

I'm afraid not. They are not talking about 20% of the agency's expected income but 20% of the overall value of the contract.

[Fresh Air]

Good point.

Fresh Air, when you opted out, did you opt out in writing before you met the client? If you opted out because it was included in your contract or after you had met the client then that may not be a valid opt-out therefore they can't enforce the exclusivity clause against you.

I think your first action is to tell the client about the lockout clause and ask them to deal with the agency on your behalf. The client has a lot more clout than a contractor.

Seems to be the general consensus! I'm hoping to move this on with the client at my side!

[Fresh Air]

If I've read this right, your client can end their agreement with the agency who recruited you to work for them (the client) but, your agent has a clause in your contract which says you have to pay 20% if you return to the same client within x period of time. The client wants you to contract direct with them, yeah?

That being the case, tell the client you'll agree to this but they have to pay the 20% to the client and you wont work direct until you have written agreement between all parties your co wont get stiffed for the 20%!

Hi Bolshie - yes you have it right; the client has a contract with the agency stating that they can go direct to the supplier after X number of weeks, but my contract with the agency has the previously mentioned restrictive covenant.

As it is the Client who will be saving by me going direct, I agree with you and some discussion will need to take place. Although my concern is that the client will take into account the agency percentage during any negotiations or reviews

[Wanderer]

The opinion on this board is that even if you think you're opted out, you're opted in.

Good point.

Fresh Air, when you opted out, did you opt out in writing before you met the client? If you opted out because it was included in your contract or after you had met the client then that may not be a valid opt-out therefore they can't enforce the exclusivity clause against you.

I think your first action is to tell the client about the lockout clause and ask them to deal with the agency on your behalf. The client has a lot more clout than a contractor.

[NotAllThere]

The opinion on this board is that even if you think you're opted out, you're opted in. I wonder what a court will decide on that one?

Who is your contract with - i.e. who is the supplier. You or your ltdco? Because you could always close down your ltdco and start up a new one.

[Wanderer]

Opted-In or Opted Out....I am opted-out so that doesnt help in this case!

Oh dear, that was a bit of a mistake then.

Chances are that the Agency will just drop the matter. If they don't, you could argue that it's a restraint of trade and therefore can't be enforced. Tell them if they take it to court and your Co wins then it will void this contract term for all their contracts so they will never be able to enforce it again. It raises the stakes and they will probably let it go.

Alternatively, you can take all the money out of your company and form a new one. The agency can only enforce the contract against your old company and they will be flogging a dead horse because it will have no money.