Reply to: Client Approached about going direct

[Support Monkey]

Check your Contract, one of my previous contracts had a clause stating 6 months before going direct however there was also a clause that said If i wanted to go direct in that 6 month period i would have to pay the agency, I seem to think it was 3%, it was a few grand but probably worth it depending on the rate increase.

I have looked to go direct a couple of times but always been put off by the invoice payment dates, you could be looking at 90 days before they cough up and some big companies are worse than the little ones, you could be out of contract before they pay you, and if they go bust that's alot of money to write off

[Andy Hallett]

Just do it. They prob won't find out (unless you do stupid stuff like update linkedin or tell them where you're going), or have the client talk to the agent along the lines of: we want this guy, and if you ever want to place contractors with us in the future you'll let this one go ... which I've done before without problem. People worry too much on here...

Of course they won't, it's not like they know this happens and actually have measures in place to check...

[northernladuk]

Why does the client want to go direct?

He wants to pay less, and he will probably want better terms and conditions. In other words you probably won't be getting a lot more and the agency might well react and give you a hard time.

My view is, it isn't worth the hassle unless the client will do a deal with the agency.

At a client I was working at they pushed us from our agencies to a single supplier with a low margin, guess what? our rates didn't change, and the annual negotiation on rate was replaced with a take it or leave it offer and when they decided to cut the rates we were all sacked and offered new contracts.

My response to going direct is that it would have to be agreed with the agency. Why should you take a legal risk so the client can save money.

A very good and pragmatic point. Many people jump at the idea of getting rid of the agent just because they hate agents rather than thinking about the situation and making the best decision based on the factors of the whole thing. It should be possible to negotiate a better rate but isn't always the case so needs considering on an individual basis.

[BlasterBates]

Why does the client want to go direct?

He wants to pay less, and he will probably want better terms and conditions. In other words you probably won't be getting a lot more and the agency might well react and give you a hard time.

My view is, it isn't worth the hassle unless the client will do a deal with the agency.

At a client I was working at they pushed us from our agencies to a single supplier with a low margin, guess what? our rates didn't change, and the annual negotiation on rate was replaced with a take it or leave it offer and when they decided to cut the rates we were all sacked and offered new contracts.

My response to going direct is that it would have to be agreed with the agency. Why should you take a legal risk so the client can save money.

[Contreras]

Wouldn't the MoO aspect be covered by the fact that the client has an option to ask him to work on Monday/Friday but they aren't obliged to (and presumably if they don't want him to, he doesn't get paid)? Or would OP also need the option to turn down working on a Monday/Friday if it didn't suit him for it to be effective?

Regarding MoO, I'd be more concerned about the apparent obligation of the client to provide work on Tues-Thurs and the for the OP to accept it Mon/Fri when requested.

To the OP: if the client is the one asking to go direct then you may as well humour them in discussions for now. I wouldn't worry too much about the handcuff clause personally but I'd also definitely not be discussing it with the agent. The fall back position will always be to renew the agency contract.

Ask the client if they'll accept your company's Terms of Business or if they expect to impose their own contract. If it's the later then ask for a draft copy or template - at the very least this should ensure the matter has been escalated to the decision maker.

Ideally they'll accept your contract terms but if it's the client's own contract then do get it IR35 reviewed because there's a good chance it'll just be a fixed term employment contract re-hashed to engage a ltd co. contractor.

I'd hold off on any discussion of the rate except to suggest that you could obviously beat the rate they have with the agency, but it would depend on the payment terms offered, etc.

[TheCyclingProgrammer]

Same but I am erring towards MoO being towards new work once the old lot is finished similar to that of a perm employee. Once he finishes a contract he has a reasonable expectation he will get some more work. Work on a given day is a business requirement/negotiation rather that an obligation. Lot more complex than that but that is my current line of thinking.. ish..

Agreed...although I suppose the whole "don't turn up tomorrow as we don't need you" idea ties nicely into the idea that somebody who is genuinely outside of IR35 is engaged to work on a specific project and isn't just a bum on seat (as does not being obliged to take on a new contract when the current one ends).

IOW, there may be genuine reasons when engaged on a specific project why they client might not need you on a particular day: project might be on hold, there are budget issues, the particular aspect of the project you are working on is blocked by some other part of the project. Being told not to work for any of these reasons are IMO all good pointers to being outside of IR35.

If on the other hand you were just hired to be a bum on seat and the client viewed you as such, even if you were working on one project they'd probably find you something else to do in the event of any of the above and ask you to work anyway, which would be a good pointer to being inside IR35.

That's how I view it anyway.

[northernladuk]

Wouldn't the MoO aspect be covered by the fact that the client has an option to ask him to work on Monday/Friday but they aren't obliged to (and presumably if they don't want him to, he doesn't get paid)? Or would OP also need the option to turn down working on a Monday/Friday if it didn't suit him for it to be effective?

It's never been that clear to me whether MoO relates to offering work within the scope of an existing contract/schedule (e.g. don't turn up tomorrow, we have nothing for you to do), the offering of a new contract/extension or both. I always make it clear in my contracts that a client is not obliged to give me work on any given day and that I'm not obliged to take on an extension if one is offered - seems reasonable to me. I generally rely on D&C to put me outside of IR35 anyway.

Same but I am erring towards MoO being towards new work once the old lot is finished similar to that of a perm employee. Once he finishes a contract he has a reasonable expectation he will get some more work. Work on a given day is a business requirement/negotiation rather that an obligation. Lot more complex than that but that is my current line of thinking.. ish..

[TheCyclingProgrammer]

Correct, that point would not cover your main contract as being outside IR35. It applies on a contract-by-contract basis. In essence, you must demonstrate at least one of RoS, lack of MoO and lack of D&C on each contract where you claim to be operating outside IR35, both in the contract and in reality, i.e. demonstrably through working practices.

Wouldn't the MoO aspect be covered by the fact that the client has an option to ask him to work on Monday/Friday but they aren't obliged to (and presumably if they don't want him to, he doesn't get paid)? Or would OP also need the option to turn down working on a Monday/Friday if it didn't suit him for it to be effective?

It's never been that clear to me whether MoO relates to offering work within the scope of an existing contract/schedule (e.g. don't turn up tomorrow, we have nothing for you to do), the offering of a new contract/extension or both. I always make it clear in my contracts that a client is not obliged to give me work on any given day and that I'm not obliged to take on an extension if one is offered - seems reasonable to me. I generally rely on D&C to put me outside of IR35 anyway.

[VectraMan]

Just do it. They prob won't find out (unless you do stupid stuff like update linkedin or tell them where you're going)

There is that. Of course a contract doesn't mean you have to do something, it just means you're liable to be sued and pay compensation if you don't.

Do you really want to be direct? It means you're going to be the one trying to get money out of the client, and you may have to live with longer payment terms. If your rate is going to be the same, you might not want to be so keen.

[Goatfell]

A previous client of mine was very keen for their contractors to go direct, probably because the head of department was a contractor and described agencies in the usual terms.
When my agent was approached they said "Fine no problem, it'll cost you £X,000 to buy them out".
The end result was that I gave the agent the required notice at the beginning of the first extension, then a new direct contaract was put in place.

[Jeebo72]

Hello - I am currently in contract until the end of the year. The client has approached me about going direct at the end of this contract. The contract has a 6mths clause about working for the client after termination of contract.

I have heard various 'ideas' about whether this is enforceable (freedom of labour) or getting around it (eg. changing my job title...so it is effectively a new role I have been given) .....but does anyone know if there is a way I can contract direct without taking a 6mths holiday ?

I know this is not very ethical, but I am very keen to continue with this contract if possible.

TIA.

Just do it. They prob won't find out (unless you do stupid stuff like update linkedin or tell them where you're going), or have the client talk to the agent along the lines of: we want this guy, and if you ever want to place contractors with us in the future you'll let this one go ... which I've done before without problem. People worry too much on here...

[jamesbrown]

normally this translates as a 4 day week with the idea that if I am not needed on the friday I *could* consult elsewhere.......would this not cover IR35 ?

Correct, that point would not cover your main contract as being outside IR35. It applies on a contract-by-contract basis. In essence, you must demonstrate at least one of RoS, lack of MoO and lack of D&C on each contract where you claim to be operating outside IR35, both in the contract and in reality, i.e. demonstrably through working practices.

[Treacle100]

I'm not that confident about IR35 - but I have a contract for 5 days a week with only an option to work mondays and fridays if the client needs me to....normally this translates as a 4 day week with the idea that if I am not needed on the friday I *could* consult elsewhere.......would this not cover IR35 ? I am pretty certain that the client doesn't view me as a permanant resource......

[TheFaQQer]

If the role is the same, and the client therefore views you as a permie, how confident are you of your IR35 status?

[Treacle100]

"Is the client willing to pay a sweetener to the agent to release you or better still will he be willing to strong arm the agent to let this one go else risk any future business from them?

When you go direct what will you be doing? Same work or a completely different piece? "

I don't know about whether they would pay a sweetener..they could use "strong arm" tactics as I amnot the only company here through the agent...

I will be doing the same work as it is BAU stuff.....but we cover two software installations and I support one, the idea (if getting a diferent role would work) is that I be assigned to the other (and still support both)...

Thanks for replies so far !!