Reply to: Contractor conundrum - Legal advice appreciated

[The Agents View]

I see you are dropping names into the discussion here. Is this a prod at a particular person because they are associated with the agency in question?

Not in the slightest. As far as I know, this does not involve anyone who would post on CUK. If I thought it did, I wouldn't be posting it - I don't really want to be "showing my hand" to anyone!

[Wanderer]

I'm not wrong in thinking that this is like business suicide though, am I?

I see you are dropping names into the discussion here. Is this a prod at a particular person because they are associated with the agency in question?

[The Agents View]

[QUOTE]

You tell us!

Under what circumstances would you let a high margin contractor remove your agency from the loop and go and work through another agency without going legal on them?

If you can't think of a situation where you would bend over and take it then why do you think the other agency are going to just let this go?

I would bend over and take it if I thought it was going to generate me approximately £1m turnover.

Just to go back to Andy Halletts point about margin increasing with commercial value - I've been thinking about this overnight. Actually the contractors value has increased, but the agents value has decreased (mainly because I've left - obviously ) So yes - the day rate should rise. But that should not mean an automatic rise in the rate of the agency - even if they were doing their job properly. Perhaps I'm too nice for this game....or maybe I just believe that doing what is right, ultimately keeps relationships strong - and relationships are what recruiters rely on - especially in a recession.

OK, who is the client talking to? Is it just some oik of a recruitment consultant or has this matter been escalated to the director level at the agency? Sounds to me like they are talking to some oik and they need to talk to someone who can talk sense.

Whilst it IS an oik, it is fed from the Directors above who will be listening in to every call, and doctoring every email. This is their style and the result will be absolutely no different regardless of who they escalate to.

I'm not wrong in thinking that this is like business suicide though, am I?

WTF is the contractor doing living in a hotel for 5 years?

Correcto. Hotel is "on campus" so is very convenient for him. And the microwave Lasagne that they serve for dinner, is apparently "better than the **** he gets served at home"

[NotAllThere]

... My attitude of short term pain, for a long term gain, was not well received by my employers, and the counter response was so short of business nous, that it led to my resignation.

Sounds like an agency who started legal proceeding against my client over a dispute who introduced me first. They got roundly beaten up by the client legal department, lost all chance of supplying anyone else to the client, and, when I was a hiring manager, lost all chance of supplying me with anyone.

I'd have the contractor take a 3 month contract break, and then rehire through another agency.

[Wanderer]

So - under what circumstances, could the contractor remove the agency from the loop, and retain the client, without a whole heap of legal challenges?

You tell us!

Under what circumstances would you let a high margin contractor remove your agency from the loop and go and work through another agency without going legal on them?

If you can't think of a situation where you would bend over and take it then why do you think the other agency are going to just let this go?

Agency point blank refuses to do this....to the point of screaming at the client and contractor.

OK, who is the client talking to? Is it just some oik of a recruitment consultant or has this matter been escalated to the director level at the agency? Sounds to me like they are talking to some oik and they need to talk to someone who can talk sense.

the agency should be able to at least partially cover the hotel costs (£70 per night) out of their margin.

WTF is the contractor doing living in a hotel for 5 years?

[Andy Hallett]

Whether or not an agency worker is an employee has been tested at Employment Tribunals a number of times but I can't think of an instance when a claim has been successful or not overturned on appeal - James v London Borough of Greenwich seems to be a reasonable benchmark case.

Exactly, being an agency worker gives the client some security in this area. If it was direct is still just a slight risk, but claims, hearings and appeals are a pain in the arse.

[LisaContractorUmbrella]

Nothing to do with IR35. If someone is contracting direct, performing work in a certain way there is a (chance) that they can claim to have effectively been an employee. Much more prevalent in Europe but with pressure on contract rates don't be surprised to see a few more cases.

Whether or not an agency worker is an employee has been tested at Employment Tribunals a number of times but I can't think of an instance when a claim has been successful or not overturned on appeal - James v London Borough of Greenwich seems to be a reasonable benchmark case.

[Andy Hallett]

Contractor conundrum - Legal advice appreciated

Given that IR35 is determined by the actual working practises, what exactly do you do to reduce the risk??

Apart from telling the client that they shouldn't consider the contractor an employee, I can't think of much that you could do to reduce their risk, to be honest.

Nothing to do with IR35. If someone is contracting direct, performing work in a certain way there is a (chance) that they can claim to have effectively been an employee. Much more prevalent in Europe but with pressure on contract rates don't be surprised to see a few more cases.

[TheFaQQer]

reduce risk to client that someone there for 5 years could be deemed an employee.

Given that IR35 is determined by the actual working practises, what exactly do you do to reduce the risk??

Apart from telling the client that they shouldn't consider the contractor an employee, I can't think of much that you could do to reduce their risk, to be honest.

[The Agents View]

If you google 'Andy Hallett recruitment' you can find out exactly who I work for, it is even in my profile on here.

Ultimately it is the client that is asking for the discount here, if they were a good client and we saw a future, we would of course look at our pricing model.

I actually knew who you worked for before - that was a slightly tongue in cheek comment.

This is why their attitude is a real mystery to me. This client has consistently turned over £4million with the agency previously. They've taken a dive recently because of the economy, but they are on the verge of having six further, major projects approved, for which they require contractors.

My business sense tells me that the right thing to do in this situation, is to make sure that your "inside man" (your contractor who has been representing your business for 5 years, and who has a tendancy to be loose lipped about who is who, what is what, and how things work) is there - regardless of whether you make margin which makes the analysts happy - by doing so, you gain an advantage, and an advocate of your business on site, feeding you information, so that you simply cream the placements. Take the short term pain, to guarantee the long term gain. Simple business sense, surely?

[Andy Hallett]

Contractor conundrum - Legal advice appreciated

Because £230,000 of fees for one person, is quite enough.

And because the fees were agreed around a set of key customer services pledges - none of which have been fulfilled since the agent who did the introduction, left (that's ME!)

Andy Hallett, I guess you work for an agency similar to my previous employer - one which claims that they add value by being part of projects...... It's all poppycock. We take a set of requirements, we match them to a contractor. We do not "become part of the project team" or any other baloney - we do a job - which we should be paid upon - but even the most avid fan of the agency environment, has to admit that after 5 years, and effectively delivering enough profit to pay for one of the directors houses, he has the right to expect a little bit of margin to cover a hotel during a recession, surely?

If you google 'Andy Hallett recruitment' you can find out exactly who I work for, it is even in my profile on here.

Ultimately it is the client that is asking for the discount here, if they were a good client and we saw a future, we would of course look at our pricing model.

[The Agents View]

Clearly, not enough lol he wants seconds....

Agents fighting on a contractor board now I've seen it all....



Oh, and my main point was "If they were to lose the contractor - they'd go bonkers. he's pivotal to a number of major investments."

Clearly he's not 23k pivotal. That's just an extra £100 for each week he's been there and if he's there another 5 years, that makes it £50 even before you take off the saving they will make when they eventually extricate the greediest agent out of the players

£23,000 is a matter of principle really - but equally where, internally, do you put that cost? One could argue that it should come out of the budget of every project he has worked on historically. That's not possible - so then you end up with in-fighting of "Why the f*** am i paying this fee for someone elses' lack of commercial savvy, from MY budget, and therefore affecting my chances of hitting budget/ getting my bonus?"

[The Agents View]

The OP is clearly doing this for the good of the contractor, well done you. Given the buyout clause represents a mere 23 weeks it would make economic sense for the client to activate this for what seems like a long term contract which I presume will roll on well past that.

Also if the agency contract between the client is sound then it will be a transfer fee and will be 'pre agreed', failure to supply does not therefore come into play.

There is also a common belief from contractors that margins should go down. In this example, the economic value to that client of said contractor as a result of the agency's clearly spot on introduction has risen, why shouldn't the margin go up?

Because £230,000 of fees for one person, is quite enough.

And because the fees were agreed around a set of key customer services pledges - none of which have been fulfilled since the agent who did the introduction, left (that's ME!)

Andy Hallett, I guess you work for an agency similar to my previous employer - one which claims that they add value by being part of projects...... It's all poppycock. We take a set of requirements, we match them to a contractor. We do not "become part of the project team" or any other baloney - we do a job - which we should be paid upon - but even the most avid fan of the agency environment, has to admit that after 5 years, and effectively delivering enough profit to pay for one of the directors houses, he has the right to expect a little bit of margin to cover a hotel during a recession, surely?

[The Agents View]

The salient points:-



How much did you get out of the creamy margin?

Bit of a stupid question really. About 15% of the profit. Like any other recruiter. I was there for 7 months after placing him - I'm sure you've got a calculator to do the rest.


This kind of action was commonplace within the business, and essentially ruined my relationship with the client - the client asked for a little leniency on a fee for someone else, about 7 months after this placement, with huge projects on the horizon, and myself and one other poised to essentially "make hay". My attitude of short term pain, for a long term gain, was not well received by my employers, and the counter response was so short of business nouse, that it led to my resignation.

[Andy Hallett]

Contractor conundrum - Legal advice appreciated

As a result of the contractor's continued professional development. Agency has done cock all for x years.

Manage the extensions, ensure payments are guaranteed, accurate and timely, reduce risk to client that someone there for 5 years could be deemed an employee.

In this instance they found the contractor a solid role for 5 years (whilst many sit on the bench) and the end client a resource that they continue to consume. Worth every penny.