Reply to: Agency Rates

[Wanderer]

I had a 3 monther at a client and found out that the agency were taking a huge cut. As I was happy(ish) with the initial rate I had no real complaints. Client wanted me to stay on after the 3 months so I said to the agent I was looking for a (modest) increase in my rate. Cheeky sod said he'd have to put it to the client but he "didn't expect them to budge on the rate". He actually did go to the client who, quite reasonably, didn't want to increase what they were already paying. I decided not to renew, and subtly mentioned to the client why. Client dumped the agency.

So everyone loses really. Sounds like the agent was being pig headed.

I find it's best to talk the agency into coming clean on how much they are making or talk to the client and see if they will collude with you to beat the agency up. For the first 3 months the agency can charge what they like, but after that I'm gonna find out what their margin is and have a chunk it for myself if they are taking more than 10%. That's just the way I do business.

[Hobbes]

I had a 3 monther at a client and found out that the agency were taking a huge cut. As I was happy(ish) with the initial rate I had no real complaints. Client wanted me to stay on after the 3 months so I said to the agent I was looking for a (modest) increase in my rate. Cheeky sod said he'd have to put it to the client but he "didn't expect them to budge on the rate". He actually did go to the client who, quite reasonably, didn't want to increase what they were already paying. I decided not to renew, and subtly mentioned to the client why. Client dumped the agency.

[lukemg]

Clearly, they are f***ing you over, it's legal too so nowt you can do on that score. BUT - you do have useful information to use. If you are on a 3 monther, pull your guts out to make the client really keen to keep you on, that gives you even more strength.
Agent gets in touch about extension, ask him direct why he said the rate was lower and upped his %age. No doubt there will be plenty of pathetic reasons or it was another pimp, not me guv. Tell them you want the original rate, ask for more than that if you are feeling bolshy.
If you are getting nowhere, tell them you will chat with the client about the rate if necessary (who are unlikely to know about the markup). You dont WANT to do this as it is unprof, but if needed, tell the client manager who knows the numbers you are really keen to stay but that you feel the rate (tell them the number) is below market so you will have to think about it (no ultimatums so you can always back track).
Agent has had a good earner and should put his hands up at this stage but some won't. If you are on 6/12 months, tell them you will walk if they don't sort it, but don't do so until you have landed another role and told the client exactly why.

[PSK]

Perhaps the OP agreed on the rate with the agent based on the representation made to the OP by the agent that the OP would be put to the client at the lower rate to improve their chances of securing the contract. In some circumstances, businesses are able to rely on representations by their contractual counterparties and some misrepresentations can have significant consequences.

[perplexed]

I never said it was legal advice, just that if the OP wants to make a fuss and highlight that the agency is taking a far larger cut than he had indicated, whatever any signed contract said, then good luck to him.

Like I said, agents do it because people let them get away with it.

Agreed - which is why it was his decision initially to accept the lesser rate offered by the agency.

Can't sue over that.

Would end client care if OP raises a fuss? End client would pay the same - figures would just be adjusted in terms of the agency margin. End client wouldn't give two tulips what the agency contract with the OP says, rate wise.

Is the agency margin way too high? I'd say so.

Has the OP any right to complain given he accepted the lower rate offered by the agency? Not really.

[centurian]

I never said it was legal advice, just that if the OP wants to make a fuss and highlight that the agency is taking a far larger cut than he had indicated, whatever any signed contract said, then good luck to him.

Like I said, agents do it because people let them get away with it.

[perplexed]

Perhaps not - but I don't think that means we should just blindly accept it. If the OP wants to cause a fuss over it, then good luck to him.

Agents pull this tulip because they know they can get away with it. If they knew that every time they tried this trick, it would always come back to bite them - and end up with a pissed off end client and loss of business, they might think twice before doing it.

OP verbally agreed a rate with the agency, who his contract would be with.
He signed the contract at that rate, clearly a rate he was *happy* to accept.

Good luck with that legal advice. What the agent charges as markup to the end client is irrelevant to the contract the OP signed. Sure, contractors need to be wiser to the tricks agencies try, but it was the OP who admitted agreeing to go in under a lower rate.

[centurian]

Verbal agreements aren't worth the paper they're written on.

Perhaps not - but I don't think that means we should just blindly accept it. If the OP wants to cause a fuss over it, then good luck to him.

Agents pull this tulip because they know they can get away with it. If they knew that every time they tried this trick, it would always come back to bite them - and end up with a pissed off end client and loss of business, they might think twice before doing it.

[SueEllen]

2) It's probably in your contract that you are not supposed to discuss your rate with anyone else.

I've never had that in a contract.

And in fact I have no issues with telling the client exactly what the agency is paying me if the client asks.

[jmo21]

I saw a contract advertising xxx a day, the agency offer to put me in at a lower rate – xx a day to the client to secure the role. However it appears that they did not offer me to the client at a lower rate.

Its not business, as they lied and misled me. We had a verbal agreement on the rate the client would be charged. This is a breach of that.

I have only stated a few facts, but basically they misled me into taking a lower rate than was advertised, and that this reduction would be passed onto the client. I now have found it that it wasn't but that they are pocketing the difference.

It's a sad tale that is as old as the contracting hills.

You agreed xx for the role, and whether they actually used the words "xx is exactly what we will charge the client" or not, is neither here nor there - it IS business.

You signed the contract at that rate, and how they got you to that point is unlikely to be documented in email or paper form as others have said.

Also, be careful with discussing with other contractors stuff.

1) They may be lying to you.
2) It's probably in your contract that you are not supposed to discuss your rate with anyone else.

[craig1]

OK, some fact finding then:

1. Did you agree to the lower rate you would bill?
2. Did you sign a contract or contract schedule at that lower rate?
3. Did the agency say anywhere in writing that they were going to cut their rate by the same amount to help you get the role?

If the answers to the above are yes, yes and no respectively then you'd be wasting money by going near a lawyer. You only have a case if you specifically have in writing that you either:

- wanted to be put forward at the full daily rate; or
- the agency agreed that they would match the rate cut

Even then, it's a sketchy case at best.

Any other version of the facts means that it's undoubtedly annoying for you but perfectly legal. The relationship is you <-> (your company or brolly) <-> agency <-> client, not you <-> client, what the agency to client payment terms are is absolutely nothing you have a legal right to challenge.

I'd suggest you have three options:

- walk;
- threaten to walk unless you get an immediate rate rise; or
- wait until renewal and the tell them to raise it or you walk.

If I were in your situation and it annoyed me that much, I'd go for the second option unless I had under three months to go when I'd probably start the renewal discussions to make it very clear that I was serious. If it's making you so annoyed you want to sue then maybe option 1 is your best alternative.

[cojak]

Verbal agreements aren't worth the paper they're written on.

(Well, they might be if the contract is worth £100k's, but not for bums-on-seats contracts.)

[perplexed]

Rubbish. What one business charges another is nothing to do with your business and you can't dictate that. If I buy some apples the supplier can't tell me how much I can sell them for.

^^^ this.

"Wah, I agreed a rate which would be acceptable for me but agent making more money... Ima gonna sue."

Lawyers will laugh and take your money. Maybe he could then sue the lawyers as he thought he could pay them less?

[stek]

Its not business, as they lied and misled me. We had a verbal agreement on the rate the client would be charged. This is a breach of that.

Rubbish. What one business charges another is nothing to do with your business and you can't dictate that. If I buy some apples the supplier can't tell me how much I can sell them for.

[perplexed]

Its not 17 percent its 40% and its still a breatch of what i agreed to be billed at. I havnt mentioned the billing perion invoice period or anything else, and the service is terrible. so im interested in what are these assumptions youre making in reference too. i have only stated a few facts, i think i will talk to my barrister about breach of the agreement and agreed rates see what he says.

Please inform us of the outcome.

I honestly can't think what it would be.