Future contracts / Extensions

It's up to the contractor to get all the clauses in a contract legally reviewed and negotiated until they are satisfied with them.

However as contracts tend to cover more than one area of law and not just IR35, then you may need more than one legally trained person to look at them.

Agents and direct clients don't tend to expect you to do this and also know anything about contract law.

Unfortunately, it seems many agents are surprised that some of us do know a few things about contract law !!!!! Its a pity some agents take the view that contracts are unchangeable and its either 'sign it or else' type of attitude on their part....so you end up walking away, and the client is the loser......

[SueEllen]

Seems to me a lot of contracts agencies put forward these days are so lop sided in favour of the agency, the contractor has no hope ! It begs the question of whether the contracts are worth the paper they are written on because a lot of threads seem to suggest some clauses are unenforceable (e.g. restraint of trade, etc). One would have thought that, if these contracts were to be tested in court, that one would argue the good faith wasn't there in the contract to begin with with clauses like the ones above (just examples) or the ones you described.......

It's up to the contractor to get all the clauses in a contract legally reviewed and negotiated until they are satisfied with them.

However as contracts tend to cover more than one area of law and not just IR35, then you may need more than one legally trained person to look at them.

Agents and direct clients don't tend to expect you to do this and also know anything about contract law.

A few points on this:

1/ There's a fair few complaints on these forums about agencies acting dishonestly and unprofessionally and rightly so. It's good for the industry to raiae these issues and make it more transparent. However in my mind this doesn't warrant a contractor acting in the same way to be excusable.

2/ I wholeheartedly agree that there is no reason and in fact it's great that you are thinking as a business person (building and maintaining relationships with business contacts that will bring in future work).

3/ If you have made the effort and are successful this then you are in a stronger bargining position when negiotaiting rate increases / reducing agencies margins.
*** You just need to be canny about how you negotiate. (Guess there's plenty of threads on this or start another one if you need advice) ****

3/ I would be surprised if any agency doesn't protect their position, but having clauses in their contracts with both parties to avoid being sidelined having put the effort and expense in gaining the opportunity to place a contractor and source the right contractor for a role.

4/ There will be limits to these and typcially it's a 6 month or 1 year period whereby the agency will stipualte that future work gained from the introduction should be routed via themselves or some compensation for this.

5/ Word of warning: A lot of agencies now employ a Revenue Protection team internally (or outsource to dedicated companies that do this on behalf of a number agencies) that monitor contractors and clients to see if this is being abused. Question whether you want to avoid any external calls and everyone else in the company doing the same on your behalf / never mention who you have worked for on your CV / never being able to have reference confiming dates of employment.

6/ Agents are much more open to pursuing legal channels against contractors as a means to protect their business than ever before, that can be against your Ltd company (well you could just wind it up, but that a lot of hassle).

Interesting points you raise....

Is it common for agents to include clauses in their contracts like:

a) Liquidated damages in the event of a termination giving the agency the right to take all fees owing as damages or an 'administrative fee' ????

b) To suspend or terminate the contract for any reason ? Without notice ? For any reason ? And without consulting the contractor ?

c) To charge the contractor a whopping 25% of the TOTAL value of the contract they win if they then go and work for the same client inside a year ??????


Seems to me a lot of contracts agencies put forward these days are so lop sided in favour of the agency, the contractor has no hope ! It begs the question of whether the contracts are worth the paper they are written on because a lot of threads seem to suggest some clauses are unenforceable (e.g. restraint of trade, etc). One would have thought that, if these contracts were to be tested in court, that one would argue the good faith wasn't there in the contract to begin with with clauses like the ones above (just examples) or the ones you described.......

[Another Agents View]

Future contracts / Extensions

A few points on this:

1/ There's a fair few complaints on these forums about agencies acting dishonestly and unprofessionally and rightly so. It's good for the industry to raiae these issues and make it more transparent. However in my mind this doesn't warrant a contractor acting in the same way to be excusable.

2/ I wholeheartedly agree that there is no reason and in fact it's great that you are thinking as a business person (building and maintaining relationships with business contacts that will bring in future work).

3/ If you have made the effort and are successful this then you are in a stronger bargining position when negiotaiting rate increases / reducing agencies margins.
*** You just need to be canny about how you negotiate. (Guess there's plenty of threads on this or start another one if you need advice) ****

3/ I would be surprised if any agency doesn't protect their position, but having clauses in their contracts with both parties to avoid being sidelined having put the effort and expense in gaining the opportunity to place a contractor and source the right contractor for a role.

4/ There will be limits to these and typcially it's a 6 month or 1 year period whereby the agency will stipualte that future work gained from the introduction should be routed via themselves or some compensation for this.

5/ Word of warning: A lot of agencies now employ a Revenue Protection team internally (or outsource to dedicated companies that do this on behalf of a number agencies) that monitor contractors and clients to see if this is being abused. Question whether you want to avoid any external calls and everyone else in the company doing the same on your behalf / never mention who you have worked for on your CV / never being able to have reference confiming dates of employment.

6/ Agents are much more open to pursuing legal channels against contractors as a means to protect their business than ever before, that can be against your Ltd company (well you could just wind it up, but that a lot of hassle).

[SueEllen]

2. The worker and/or client have a tie-in clause which prevents them cutting out the agency. Quite common, the enforceability of this is debatable but most clients shy away from legal action. Others will just tell the agency to feck off and engage the worker directly.

And client can tell the contractor to keep it quiet so there is nothing the agency can do.

[Wanderer]

Cutting out the agency, is it advisable?

Definitely possible, it's been done lots of times. The issues to consider:

1. The client engages a worker direct, things go really well and the worker stays for > 2 years then it all goes titsup and the worker decides to take the client to a tribunal/court saying that they were effectively an employee all along. OR Worker is a foreign national who does a runner leaving a LTD company owing 10's of thousands in CT/NI/PAYE and HMRC deem that the client was actually an employer and is liable for the taxes. (Unlikely scenarios but the agencies play on these fears).

2. The worker and/or client have a tie-in clause which prevents them cutting out the agency. Quite common, the enforceability of this is debatable but most clients shy away from legal action. Others will just tell the agency to feck off and engage the worker directly.

3. The client engages a worker direct but procurement is utterly incompetent and takes bloody ages to get the paperwork sorted and the worker doesn't get paid for months at a time. (not uncommon at all).

[SueEllen]

It could take you a few years but it does work.

Some agencies only put clauses in the contractor's contract and even then depending on opt-in/opt-out and due restriction of trade they aren't enforceable. (I suggest you use the very useful search facility on this forum to look up those if you don't already know what they are.)

[northernladuk]

This can work in some instances but often it won't. The client will be locked in to the agency and some handcuff clause in your contract or the one the agent has with the client will stop you working directly. You are cutting out the agent so he is going to make sure this doesn't happen at all costs. Check your contract, it will often say you cannot go back to the client for 6 months or so.

You can leave your details with the client and try it by all means but don't expect it to work in the short term. If the client is savvy they will also drop your rate so they pocket more as well, the agency is an overhead to them as well.

Keep trying though and eventually a client will ring you up direct at some point so no harm in working that way. Just don't be too blatent and piss your agent off.

[Theonenonly]

Just as theory really.......

Cutting out the agency, is it advisable?

Say for instance I work for a company and they wish to extend my contract but they come to me first before putting the paper work together, could I get the client to stop dealing with the agency that originally brought me in and deal with me direct?

Also If I finish a contract with a company and I give them my personal details in future and they call me to offer me another contract later down the line could I cut the agency out and effectively boost my earnings by keepng their cut?

As I said this is just in theory, more of a want to know for the future.

Thanks