Reply to: Would you forfeit 20% of your contract value?

[ogreboy]

Lpi?

It would be interesting to see how the restrictive coventant could be applied by the agency. They need to prove a "legitimate protectable interest". If they are no longer on the PSL of the client - I can't see that there's an interest for the clause to protect?

[Pickle2]

roll the company, and sign with client co with a new one. Sorted.

[swamp]

So you went though a agency, client hired you on basis of your CV without ever talking to you (email,phone,face to face, séance) or agency made you sign the opt out before any of the afore mentioned happened?

Because if that is not the case (very very very rare) you are actually opted in regardless of what you signed

This is my understanding of the Employment Regs. If you have been "introduced" in any way to the end client (before you sign) then you cannot opt out.

http://www.opsi.gov.uk/si/si2003/20033319.htm

(9) Subject to paragraph (12), paragraphs (1) - (8) shall not apply where a work-seeker which is a company, and the person who is or would be supplied by that work-seeker to carry out the work, agree that they should not apply, and give notice of that agreement to an employment business or agency, provided that such notice is given before the introduction or supply of the work-seeker or the person who would be supplied by the work-seeker to do the work, to the hirer.

My reading of "introduction" is interview. At least the moment you start work for the client you cannot opt out.

[Hex]

I would write to the existing agency and inform them that my contract is up for renewal. I would say that if they wish to renew you to work at the current contract, then they should let you know by "such and such date (sometime in the next week)" and send you a contract by that date, otherwise you will presume that they do not want to renew you, in which case you will investigate the possibility of carrying on working there through another party.

If you have asked them formally for a contract for signing and they don't send you one then I would think you would be in a stronger position to go via a different agency. It would at least show that you tried to involve them in the renewal and they didn't take you up on the offer.

[Not So Wise]

Not So Wise by name, Not So Wise by nature.

No need to sigh. You're not talking to an inexperienced contractor here. I know all about Employment Regs and the fact that if you opt-in this clause is void.

So you went though a agency, client hired you on basis of your CV without ever talking to you (email,phone,face to face, séance) or agency made you sign the opt out before any of the afore mentioned happened?

Because if that is not the case (very very very rare) you are actually opted in regardless of what you signed

I, like a true contractor, opted-out.

Phrase normally quoted by those who have been drinking to much agency koolaid

[BlasterBates]

I would see a lawyer on this one. My gut feeling is that under normal circumstances an agency is entitled to compensation, but under the current circumstances where a client is refusing to work with the agency, I think probably not. It is too grey an area for a tel. call to a help line, or alternatively go ahead and contact the lawyer when you need them. I think the most likely worst case is them holding back the last payment.

[singhr]

I did this once and got away with it but it was a very stressful experience. The previous agency withheld payment of my last invoice which was quite a chunk as it was monthly payment. They coughed up in the end but I had quite a few sleepless nights. I would decline and put onus on your client to resolve with agency or walk away.

[RichardCranium]

I wish I had thought of this a few hours ago:

Might contacting egos be worthwhile? He is an IT contract law specialist and for a day or two's money he can give you a definitive answer / way to proceed.

As there are a couple of hundred of you onsite then between you (and I think I suggested this to someone else a few days ago) it need not be expensive. If you can find half a dozen others to share the cost then it is a trivial expense.

Go get some proper grown-up legal advice. You're a professional and you deserve it.

[downsouth]

You said there were a couple of hundred involved. In this case, with a load of wild assumption you are looking at a substantial sum of lost revenue to the agency.

It is unlikely they will just take it lying down.

but surely in this case you'd need to look at this a different way, if the client - agency contract does not exist, then would the agency continue to pay the LTD company who decides they will honour the agency - LTD contract and continue payments, afterall the LTD has done nothing wrong in this.

Somehow I very much doubt it, how many times do we hear that the client has ended the contract and therefore the agency also does the same with the LTD.

Each LTD has to protect its income streams and are these restrictive terms really enforceable??? most LTD are the small fry in these arrangements and often roll over as they dont have the cash, access to highly paid legal bods to challenge these terms.

[swamp]

Not So Wise by name, Not So Wise by nature.

No need to sigh. You're not talking to an inexperienced contractor here. I know all about Employment Regs and the fact that if you opt-in this clause is void.

I, like a true contractor, opted-out.

Did you sign the opt out before you started work?

[Zippy]

My contracts have tended to state that I am not allowed to work for the agency's client (via someone other than the agency) for a period of n months. If the end client has 'sacked' the agency, then surely the agency can't consider them a client and this clause cannot apply?
Or is it just me?

[norrahe]

I have heard of people doing the form a new ltd approah to get around this in the past. Seems like a bit of a dodge, but it is an option, if a bit risky. I don't favor that at the mo.

A friend did that when asked back directly to an old clientco, she had no problems.
I would advise checking the wording of your contract, if it's xenocorp then it pertains to your company and not a named individual. If you are specifically the named employee on the contract, then it might not be the best route to take.

[ASB]

Oui. Awaiting response from old agency. Rumour is that they will enforce the clause if contractors sign with the new agency.

Xenophon,

I think there is actually more than one issue (in terms of you/agency).

1) Is this is a restraint of trade?

Well, in this case, to restate; the court will only allow what is reasonable, it will generally be very reluctant to allow any restraint where it impinges on somebody's ability to earn a living. On the face of it you could be in that position. You could try and argue that the agency has no legitimate business interest to protect and therefore there is no loss anyway. [The agency may well argue that their relationship has been severed simply to get agency 'b' in to take over everybody more cheaply and as such they do still have a legitimate commercial interest]

2) Is this a penalty clause?

It does look like it could be. It is specific. Generally abstract penalty's are not allowed. They have to be based on some measure of loss that is actually quantifiable, however specific penalties - like this - often are enforceable. i.e their argument may be that there is in fact no restraint, it is simply a contractual penalty should you choose to take that option. I guess you could try a force majeure argument against this, in essence that the action was necessitate by circumstance over which you had no control. http://en.wikipedia.org/wiki/Force_majeure

You said there were a couple of hundred involved. In this case, with a load of wild assumption you are looking at a substantial sum of lost revenue to the agency.

It is unlikely they will just take it lying down.

[rootsnall]

Oui. Awaiting response from old agency. Rumour is that they will enforce the clause if contractors sign with the new agency.

If you were a one off via the agent then I don't see a problem ie. it wouldn't be worth them pursuing it. If they are losing a huge chunk of their business then they will pursue it in some form or other. I can't believe the client have not addressed the issue, but then again maybe I can. Ring the PCG and explain that you need better advice than the catch all helpline, it worked for me. I'm sure you won't get a clear cut answer but maybe you'll be better informed. Ask them about the switching Ltd option, it's easy to do, if it will help, but you'd have to clear out your exisiting Ltd asap and I'm not sure how that would be viewed legally. One option is to accept the possibility of a 20% loss and take your chance. I know in my game the real cut throat market rate is more than 20% down on the rate of a year or so back, so it may infact make sense anyway. If they do send you a bill ( and others involved ) and you don't pay then they'd still have to go to court for each individual Ltd involved, some will bottle it and the agency might settle for that.

ps. in a previous agency squabble I got a look at the client-agent contract and there should be some sort of buy out clause in there that will decrease depending on how long you've been there. If you've been there a good while you may find this is down to 3 months commission. Worth a try. The client will be the more likely recipient of a court case if there are large numbers involved. You may just be a way of applying pressure to come to some sort of settlement direct from the client.

[Xenophon]

This isn't meant as patronising, but have you asked your current agency if they will let you transfer to the new agency for gratis? You're not the guilty party in this and they have nothing to gain from forcing you to walk. And they might be glad to be shot of the client.

Oui. Awaiting response from old agency. Rumour is that they will enforce the clause if contractors sign with the new agency.