Reply to: Common Contract Changes requested on contracts

[AussieDigger]

I've had a similar contract to the one you've been given and I nearly gagged on the 25% fee clause for doing work within 12 months.

The advice I was given is that its an unlawful restraint of trade. The agent was asked to remove it, they declined, i went elsewhere. This was to the bemusement of the client (a big retail bank) who rang me just recently to offer another role and asked what went wrong. I told them their big overbearing bullying agency tried to make me sign a contract that was simply unreasonable and as they refused to sort it out they lost a good candidate. The client isn't using that agency any longer.

I'd stand your ground.

[Wanderer]

Unfortunately i have signed the opt oput forms and posted is it too late or can I ask the agency to send the form back???

Have you started working for the client? If not then write to them and say that you have decided to withdraw the "opt out". The agency will try to persuade you that the opt-out will continue to apply so you can't withdraw it. They may be right or they may be wrong, don't enter into a discussion about this as anything you say may be used against you.

Contractor: I am giving you notice that I am withdrawing the opt out from The Conduct Of Employment Agencies And Employment Business Regulations that I have signed previously.

Agent: But you can't withdraw it, it's too late, the withdraw won't be valid, the opt out still applies!. The withdrawal will only apply to future contracts! Your withdrawal is therefore useless you should take it back and sign the opt out again.

Contractor: Thank you for your time, but I don't want to enter into a discussion about this. Please can we do all further correspondence with regards to the opt-out in writing
Agent:

Contractor: Thank you, good day.


Are you now legally opted out? I don't know, that's for the courts to decide but you are definitely in a stronger position.

[SueEllen]

It just the areas that as a supplier I need to ensure I get the best out of the situation is where I am concentrating on. I am hoping to negotiate the clause I have posted but will need to review again in detail and make sure Im not missing anything else.

Then if you are doing it yourself you really need a compliant and well written contract or contract template to compare it to.

In regards to the restraint of trade clause point out to the agency that case law states that a clause is unenforceable if it mentions a year. Do not go into further details. If they insist in leaving it as a year then if the situation arose you could get away with paying 3 months rather than a longer but legally compliant timeframe.

[Wanderer]

I'm willing to be corrected on this, but my understanding (possibly incorrect) is that an Opt Out is only valid on a single contract basis and a blanket clause like that would be invalid. If nothing else you must explicitly and voluntarily choose to operate outside of the regulation and are able to opt in at any renewal point.

Have a read of the regulations, it's section 32(9) that makes provision for what we call the "opt out".

Sleep inducing stuff so skipping to the chase:

(the regulations) 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.

I take that to mean that the opt out would apply for all future supplies unless it is withdrawn before the new contract is signed. Unfortunately, it's a crap piece of legislation, in particular the phrase "before the introduction or supply" is ambiguous. We may never know what it means until the legislation is either clarified or tested in court.

[TykeMerc]

WHS

Check that your opt-out only applies to this current contract. Some agencies put clauses in the form that it applies to any contract that you ever have with the agency which could haunt you in say 5 years time.

I'm willing to be corrected on this, but my understanding (possibly incorrect) is that an Opt Out is only valid on a single contract basis and a blanket clause like that would be invalid. If nothing else you must explicitly and voluntarily choose to operate outside of the regulation and are able to opt in at any renewal point.

[gamble1234]

You should actually pay to get the contract reviewed by a lawyer for IR35 and to get fair wording on clauses covering copyright, restraint of trade etc.

Once you have had a few contracts that are reviewed or look similar to the PCG standard contract template, then you can probably do things yourself.

Just use the search facility to find a solicitor.

While the agent may be upset you got their contract reviewed and changed from their standard template, they do tend to allow you to have your changed contract once they realise you have actually used a solicitor.

Thanks Sue. Did get the contract reviewed by QDOS and its outside of IR35.

It just the areas that as a supplier I need to ensure I get the best out of the situation is where I am concentrating on. I am hoping to negotiate the clause I have posted but will need to review again in detail and make sure Im not missing anything else.

[SueEllen]

Any other things in the contract I should be watching out for?

You should actually pay to get the contract reviewed by a lawyer for IR35 and to get fair wording on clauses covering copyright, restraint of trade etc.

Once you have had a few contracts that are reviewed or look similar to the PCG standard contract template, then you can probably do things yourself.

Just use the search facility to find a solicitor.

While the agent may be upset you got their contract reviewed and changed from their standard template, they do tend to allow you to have your changed contract once they realise you have actually used a solicitor.

[SueEllen]

They wouldn't send it back.

Did you sign and return the form before you had a meeting, interview or telephone conversation with the client? If so then the Opt Out is invalid anyway as you had been introduced to the client before Opting Out.
That being said the Opt Out is officially voluntary (agents behave as if it's mandatory and to your advantage of course) so I suppose you could write to them stating that you've changed your mind on the Opt Out, but frankly it's not worth stirring things as odds are it wasn't done properly anyway.

WHS

Check that your opt-out only applies to this current contract. Some agencies put clauses in the form that it applies to any contract that you ever have with the agency which could haunt you in say 5 years time.

Also the opt-out may no actually have any effect in this current contract as for example the only time I have ever done a proper opt-out the end-client:
1. Dumped agencies if there were payment disputes with the contractors. Hence the agencies chased you for timesheets and invoices to ensure you got paid.

2. Had a practice of not engaging contractors again for 12 months after their time on site ended. So all restrain of trade clauses weren't worth the paper they were written on.

[TykeMerc]

Unfortunately i have signed the opt oput forms and posted is it too late or can I ask the agency to send the form back???

They wouldn't send it back.

Did you sign and return the form before you had a meeting, interview or telephone conversation with the client? If so then the Opt Out is invalid anyway as you had been introduced to the client before Opting Out.
That being said the Opt Out is officially voluntary (agents behave as if it's mandatory and to your advantage of course) so I suppose you could write to them stating that you've changed your mind on the Opt Out, but frankly it's not worth stirring things as odds are it wasn't done properly anyway.

[jig]

What SueEllen said. You know that opt out the agency want you to sign, DON'T SIGN IT, then this stupid clause doesn't apply to you. Simples.

If you don't opt out then the tie in to the agency is limited to 14 weeks of the start of the contract or 8 weeks of the end of the contract, whichever period ends later.

Or as escapeUK says - dissolve your company and the agency get nothing. These clauses are a load of bollocks in my opinion, I very much doubt that they would be enforceable in court and they are just put there to scare contractors into settling for a handy sum of money which means the agency are quids in.

Unfortunately i have signed the opt oput forms and posted is it too late or can I ask the agency to send the form back???

I dont want to dissolve the co as Ive only been trading for one yearb

Guess that only leaves me with one choice and that is to try and negotiate on the clause!!!

Any other things in the contract I should be watching out for?

Thanks for all the help and advice so far..

[Wanderer]

gamble1234 if you are opted-in then ignore the clause and don't worry about it as it doesn't apply.

What SueEllen said. You know that opt out the agency want you to sign, DON'T SIGN IT, then this stupid clause doesn't apply to you. Simples.

If you don't opt out then the tie in to the agency is limited to 14 weeks of the start of the contract or 8 weeks of the end of the contract, whichever period ends later.

Or as escapeUK says - dissolve your company and the agency get nothing. These clauses are a load of bollocks in my opinion, I very much doubt that they would be enforceable in court and they are just put there to scare contractors into settling for a handy sum of money which means the agency are quids in.

[escapeUK]

I would have thought it's enforceable, it's not a contract of employment, it's a commercial contract between (presumably) two companies.

So just dissolve your Ltd company, make a new one and it doesnt matter?

[NotReallyButSeriously]

I queried this with the board a while ago as well, most said it was just a standard clause, however mine was worded weird and wanted a fixed percentage of 30% of a yearly wage.

Doesn't really bother me too much as the agency seem good, and I can't see why the client would need me back in that line of work after I've finished.

[amcdonald]

Do you know the agency markup, if its more than 20% then worst case you're quids in whatever happens

Also if the supplier is named as your company rather than yourself, then setting up a new company would get round the problem...

[SueEllen]

gamble1234 if you are opted-in then ignore the clause and don't worry about it as it doesn't apply. (Unless you want to set up an agency or provide workers yourself to the client via your limited company. )

If you are opted-out then you can either ignore it or be prepared to pay a solicitor in the worse case to argue that only the minimum term applies as the clause is:
1. Written badly so only 3 months would apply if any time applies.
2. 12 months is a restrain of trade as the clause is not written specifically to your company and the end client particularly if the end client is a large company.

In the case where the end-client gets rid of the agency but not you, then as the agency hasn't made a loss due to your actions there is nothing they can go after you for.