Reply to: Verbal Contract or not?

[Wanderer]

I can't see how the OP agreeing can be legally binding when he doesn't even have a limited company yet. The eventual contract will be in the name of his "yet to be set up" company. If it is legally binding already, then between whom?

Good point.

When you agree to these verbal contracts you always add that the agreement is "subject to contract" as your get out clause. I can tell you that the agency will renege on the contract in a millisecond if it suits them so don't sweat it.

Although it's bad form to renege, once the written contract arrives you can argue your way out of it in 101 different ways if you need to.

[Hex]

I can't see how the OP agreeing can be legally binding when he doesn't even have a limited company yet. The eventual contract will be in the name of his "yet to be set up" company. If it is legally binding already, then between whom?

[BlasterBates]

Just one point here, verbal contracts are legally binding, and the agent will get on the blower to the client and tell him you´ve accepted....however if after talking to an agent over the phone and agreeing you think no it´s it not for you, it´s no problem, just ring him up and tell him. But don´t just let it go on, because if you wait a couple of weeks you´ll really p*ss the client off, and you don´t want to do that. You see if you do it the next day it´s not a problem for the client to give the contract to someone else, so he won´t mind too much, but if you wait he might have to go through the interviewing process all over again. That will not go down well.

So ring him up now and decline or renegotiate but do it now. In future don´t agree straight away, always ask for a few hours or day to think about it.

[GillsMan]

maybe i'm just the exception that proves the rule....I wouldn't risk it for the sake of £15 - I'd rather report the deal and £60 for example - than have to report a deal that went t1ts up, but was worth £75 per day.

I don't know you and haven't worked with you, but there are a lot of idiot car-salesman type agents who give your industry a bad name. I would assume that when we're talking about agents, we're not talking about all agents, and not you as agent. Some/many agents are this greedy and we've all come into contact with them. Sadly, it does reflect on your industry as a whole, but that doesn't mean we tar ALL agents with the same brush.

[The Agents View]

maybe i'm just the exception that proves the rule....I wouldn't risk it for the sake of £15 - I'd rather report the deal and £60 for example - than have to report a deal that went t1ts up, but was worth £75 per day.

[Wanderer]

bork bork bork
Seriously - for a forum which is meant to be made up of business people - some of the posts on here lack even the most basic understanding of business principles.

Let's say an agent places a noob contractor with a client who pays £350 a day. They give the contractor £300 and keep £50 margin for themselves. Now they have the opportunity to take an extra £15 which you sniff at. However, in this case that's a 30% increase in their income. And don't tell me they are going to pass this saving on to the client because they won't, will they.

Now let's say the agency running costs swallow £25 of their margin leaving £25 profit on the contract. Now the agency costs are fixed so that extra £15 goes straight onto their bottom line, increasing their profit from £25 to £40. The fact is that the agency increasing the margin adds nothing to the cost of running their business so this is pure bottom line.

Therefore, screwing the noob contractor for £15 on their day rate increases the agency's profit by 60% from £25 to £40. That's not to be sniffed at.

But, hey. What do we know about running a business...

[The Agents View]

And you should know, it's not just about commission, it's about targets - and every penny counts.

My last working target (before stepping out alone) was £400,000 profit in 12 months. How much difference is £5 per day - or even the full £15 per day, going to make? Even if you times it by 10, it's not worth it - and when you take into account that it's going to ruin 1 in 10 deals - then you're into negative numbers.

Every penny counts - but you're better off, making 1 extra placement a year, than bashing everyone for fifteen measly quid.

[Murder1]

Yeah - pure greed.

Lets assume he's been squeezed by a tenner by the client (clients squeeze on every contract - it's their perogative). So he's squeezed this guy by £15. His cash margin has gone down a bit, but his percentage is a bit higher. So lets say the difference when it comes out, is £5 (although in practice, it's probably more like £3).

Now lets look at the commission schedule. At a guess, this agent takes 10% of his profit as a commission. So that squeeze, has earned him a grand total of 50p per day. By the time the tax man has taken his cut - that's what, £9 per month?

So you are telling me, that this agent, has risked P'ing off the client, and the candidate, and risked losing the deal for the sake of £9?

Or MAYBE the agent has been squeezed by £15 because others have taken lower rates, and the client actually doesn't want to upset the apple cart, so has kept all the rates the same?

Seriously - for a forum which is meant to be made up of business people - some of the posts on here lack even the most basic understanding of business principles.

Whilst not wanting to paint all agents with the same brush, the OP's story does mirror the exact same story I've experienced and colleagues have experienced. I agreed to the reduction only to find other contractors at the same place, through the same agent on the exact rate I'd wanted because they refused to budge when told that others were on less.

So in this scenario there is the possibility that the agent isn't being squeezed at all and the OP could be best served standing his ground.

[SimonMac]

Seriously - for a forum which is meant to be made up of business people - some of the posts on here lack even the most basic understanding of business principles.

Alas for the majority of people on here we are not business people, I include myself in this, I am a techie first and foremost so I naively put trust in those who do profess to be professionals. On the £15 as a first time contractor most people would have done the same as you so no point worrying over it, in future you can always say "well I would hope this is a confidentiality agreement in the contract to stop me OR THE CLIENT discussing my rate with 3rd parties so it shouldn't be an issue what others are being paid", but in my opinion the agent is probably trying to pull a fast one, I doubt they would have done it so a seasoned contractor but we all learn lessons when starting out.

As for the contract, its not worth the paper it is written on if only verbal, you can create the company etc and there are online places that can fast track it and once you have the company details this will then be needed for the formal written contract that you can get reviewed (I would recommend QDOS as they review all mine and have quite a quick turn around). Remember if they do turn around and say now I have you lets renegotiate it also works both ways, if the review picks something up you can asked for it to be changed, and again if you are not happy you need to weigh up the odds of a bad contract v's no contract and you have the option to not sign the contract.

I think it is unlikely that you will be starting Monday, very few clients would not expect a few extra days to make sure all the liabilities are covered (them and you, insurance etc) BUT UNDER NO CIRCUMSTANCES START THE GIG WITHOUT A SIGNED CONTRACT IN PLACE

[Gentile]

Hi, I'm in the middle of trying to get my first contract, and I'm not sure whether the agent has pulled a fast one on me.
1. firstly, he knocked the rate down by 15 quid, saying that the client had hired some contractors at the lower rate, and he didn't want to upset them by paying me a higher rate. I was reluctant, but agreed to this without really thinking through on it.
2. He says the client wants me to start this Monday coming, giving me only about 3 days to set up the company etc.

So have I verbally accepted a contract? What concerns me is he sneakily said afterwards, "good, I've now got your word on that".

But what I'm planning to do is get the company set up via one of the specialist accountants and get a contract reviewed for IR35.

I'm just wondering whether I'm already in a contract, and with who, the agent or client? Also, I haven't even set up the company yet, so am I now an "employee" of the agency or client or something? I thought any contract would be between a new limited company and the agency or client?

thanks in advance for any advice on this guys!

L.

You can certainly walk away at this point, if that's all you're asking. As the old adage goes, 'verbal contracts' aren't worth the paper they're not written on.

As for the £15 (per day, I hope) drop that's been foisted upon you, you just need to decide whether you want to walk away at this point knowing what's happened. Over a 3 month contract, that £15 amounts to a difference of £975; it's up to you whether you want to consider that to be school fees from the University of Life for the lesson of how to negotiate next time or not. It could be the case that you kick up a stink at this point, and it may be too late to do so since the agent's already agreed their rate with the client, in which case you'd be looking at even higher school fees for learning the lesson that you only get to negotiate each contract once.

[ChimpMaster]

Yeah - pure greed.

Lets assume he's been squeezed by a tenner by the client (clients squeeze on every contract - it's their perogative). So he's squeezed this guy by £15. His cash margin has gone down a bit, but his percentage is a bit higher. So lets say the difference when it comes out, is £5 (although in practice, it's probably more like £3).

Now lets look at the commission schedule. At a guess, this agent takes 10% of his profit as a commission. So that squeeze, has earned him a grand total of 50p per day. By the time the tax man has taken his cut - that's what, £9 per month?

So you are telling me, that this agent, has risked P'ing off the client, and the candidate, and risked losing the deal for the sake of £9?

Or MAYBE the agent has been squeezed by £15 because others have taken lower rates, and the client actually doesn't want to upset the apple cart, so has kept all the rates the same?

Seriously - for a forum which is meant to be made up of business people - some of the posts on here lack even the most basic understanding of business principles.

No, it's more likely that the client hasn't squeezed the agent, and the agent is simply screwing the contractor. The contractor, being green, has little experience of this but is clearly unhappy and hence chooses to post here for opinions.

And you should know, it's not just about commission, it's about targets - and every penny counts.

[The Agents View]

If you're not happy with the agreement, don't accept the contract. The positive side to this will be that the agent will be p1ssed off and will realise that he's lost a chance to earn because of his greed over £15.

Start looking elsewhere.

Yeah - pure greed.

Lets assume he's been squeezed by a tenner by the client (clients squeeze on every contract - it's their perogative). So he's squeezed this guy by £15. His cash margin has gone down a bit, but his percentage is a bit higher. So lets say the difference when it comes out, is £5 (although in practice, it's probably more like £3).

Now lets look at the commission schedule. At a guess, this agent takes 10% of his profit as a commission. So that squeeze, has earned him a grand total of 50p per day. By the time the tax man has taken his cut - that's what, £9 per month?

So you are telling me, that this agent, has risked P'ing off the client, and the candidate, and risked losing the deal for the sake of £9?

Or MAYBE the agent has been squeezed by £15 because others have taken lower rates, and the client actually doesn't want to upset the apple cart, so has kept all the rates the same?

Seriously - for a forum which is meant to be made up of business people - some of the posts on here lack even the most basic understanding of business principles.

[ChimpMaster]

If you're not happy with the agreement, don't accept the contract. The positive side to this will be that the agent will be p1ssed off and will realise that he's lost a chance to earn because of his greed over £15.

Start looking elsewhere.

[psychocandy]

Hi, I'm in the middle of trying to get my first contract, and I'm not sure whether the agent has pulled a fast one on me.
1. firstly, he thought he could get away with screwing another 15 quid for his cut, saying that the client had hired some contractors at the lower rate, and he didn't want to upset them by paying me a higher rate. I was reluctant, but agreed to this without really thinking through on it.
2. He wants you to start so he gets his cut asap starting Monday coming, giving me only about 3 days to set up the company etc.

So have I verbally accepted a contract? What concerns me is he sneakily said afterwards, "good, I've now got your word on that".

But what I'm planning to do is get the company set up via one of the specialist accountants and get a contract reviewed for IR35.

I'm just wondering whether I'm already in a contract, and with who, the agent or client? Also, I haven't even set up the company yet, so am I now an "employee" of the agency or client or something? I thought any contract would be between a new limited company and the agency or client?

thanks in advance for any advice on this guys!

L.

FTFY

[The Agents View]

Standard procedure really

So have I verbally accepted a contract? What concerns me is he sneakily said afterwards, "good, I've now got your word on that".

100% standard practice, to invoke EXACTLY this feeling and whilst it has absolutely no legal standing, it's designed to make you doubt renegading your decision.

I would normally say - "Great - well that's agreed then, and I know you're a man/woman of your word, so I'll commit to the client over the phone, and get the contracts out to you - welcome aboard"

It's a bit cynical, and it's not strictly necessary - but it's also a great Litmus test - if there's any doubts at that point, it will come out (in theory) if you've put the contractors integrity into the mix generally!