Unsure whether I can leave my umbrella and use my own LTD company because of contract

[LJCopy]

Hi guys,

Got a quick question for you. After seeing out a three month contract (my first one), I've been offered an extension of another 3 months. I've been with Giant Group for the initial three months who've been processing my pay roll.

After looking over my take home pay it seems i'd be much better off using my own ltd company and I'd like to do that when I extend my contract. The only problem is my contract with Giant states the following -

13.1 You hereby agree that you shall not (without the prior consent in writing of the Company) for a period of 12 months immediately following the termination of your employment with the Company, indirectly or directly or through an agency or otherwise and whether on your own behalf or in conjunction with or on behalf of any other person, firm, company or other organisation, (in any Capacity whatsoever), (a) be employed or engaged in, or (b) perform services in respect of, or (c) be otherwise concerned with the Customer for whom you were carrying out an Assignment, provided always that the provisions of this clause 13.1 shall apply only in respect of Services with which you were either personally concerned or for which you were responsible whilst employed by the Company during the 12 months immediately preceding the termination of your employment

This seems pretty shady to me. I was wondering if anyone had any similar experiences of such clauses and how they're enforced?

[grabri]

This is a fairly standard clause in Agency/Umbrella contracts. It protects them against doing what you are proposing and cutting them out their commission.

[Numbermill]

It's usually in there, but I've never come across an Umbrella Company enforcing that section. Since many of us partner up with / are accountants it's usually in their interest to get you onto an Ltd Company scheme (obviously they'd like you to go through them but they can't catch you all).

As with any contractual arrangement, there is a financial risk BUT unless you come across anyone having been pursued by Giant, I'd be confidently engaging with an accountant. You could even contact their customer support team and say you're looking at going through your own PSC, can they email you confirmation that this won't be a problem. Can't hurt.

Best of luck

Rob@Numbermill

[LJCopy]

This is a fairly standard clause in Agency/Umbrella contracts. It protects them against doing what you are proposing and cutting them out their commission.

So I'm also on the contract through an agency, who I'll still be going through with my ltd company. As in the client will be paying them and they'll be paying me.

It was the agency that suggested Giant to me and initially it seemed like a good idea as it was my first contract and would eliminate a bit of hassle. Having spoken to other contractors it now seems like I made a rather cretinous decision as I've been missing out on a lot of cash by not setting up a ltd company. An argument if ever there was one to do your due diligence.

Being that the agency who made the introduction between me and the client would still be getting their commission even if I left Giant (the umbrella), would this Giant contract clause command any clout? What would be the ramifications if I did leave them and set up a limited company?

[northernladuk]

So I'm also on the contract through an agency, who I'll still be going through with my ltd company. As in the client will be paying them and they'll be paying me.

It was the agency that suggested Giant to me and initially it seemed like a good idea as it was my first contract and would eliminate a bit of hassle. Having spoken to other contractors it now seems like I made a rather cretinous decision as I've been missing out on a lot of cash by not setting up a ltd company. An argument if ever there was one to do your due diligence.

Being that the agency who made the introduction between me and the client would still be getting their commission even if I left Giant (the umbrella), would this Giant contract clause command any clout? What would be the ramifications if I did leave them and set up a limited company?

Well I don't totally agree with that. Nothing wrong with using a brolly for a couple of months while you get going. I did it and know a lot of others that have. So you lose a bit of income for 3 or 6 months but you set off on the right foot. Peanuts in the longer scheme of things. A year or so of good contracts down the line you won't give a hoot. I wouldn't get too hung up about the 'lost' money as long as you can get it sorted in good time.

As with any handcuff the way out is negotiation. Speak to Giant, tell them what your intentions are and see what they say.