Agency & Client vs Contractor

[Mearcat]

Hi all, I have a contract which had been agreed to but another agency has found out that my rate is higher than what they are paying their contractors, the agency I deal with was brought into a meeting with the client and has had to drop his rates to match the other agency and in doing so has reduced my rate can this be allowed?

[northernladuk]

Hi all, I have a contract which had been agreed to but another agency has found out that my rate is higher than what they are paying their contractors, the agency I deal with was brought into a meeting with the client and has had to drop his rates to match the other agency and in doing so has reduced my rate can this be allowed?

Who has told you this? The agent? Assume he is lying through the back of his teeth until you have this confirmed with the client. Do you know what the client is paying the agent? This is key so you know if the agent is pulling a fast one or not. I can't help but think you are missing some key information here. I don't see what business it is of the other agent as to what your agent is paying you. That is between you are your agent. What it might be is that client is paying your agent more and the other agent has kicked off but again that is negotiation and cannot see how the other agent can complain.

Something doesn't sound right here, either your explanation is missing some key facts or this is an outright lie from your agent.

Can you be a bit clearer with the facts?

[Wanderer]

Hi all, I have a contract which had been agreed to but another agency has found out that my rate is higher than what they are paying their contractors, the agency I deal with was brought into a meeting with the client and has had to drop his rates to match the other agency and in doing so has reduced my rate can this be allowed?

As Northernladuk says, it's not entirely clear what's going on here, but generally speaking:

You will have a contract at £X per day/hour for Y months. The agency can not change this without your agreement.

However, they can ask that you accept an amendment to the contract and if you refuse then they will have to consider their options which would include cutting their margin, asking the client to pay more or terminating your contract.

You should speak to the client and ask them what's going on. My starting point would be that I had agreed the contract and I expect them to show good faith by honouring it not changing it half way through.

It could be the agency doing a fast one on you or it could be that the client is cutting the amount they are paying the agency and this cut is being passed on to you.

At the same time, you want to try and find out how much the agency is being paid and make sure their margin is reasonable, they should be taking 5-15% of the contract value at most. Tread very carefully here. Some clients will give you this information if you ask and others won't. The agency may also get very pissy if they know that you have found out.

This is a high stakes game, if you don't accept the rate cut then they may terminate your contract and you will have no redress other than to be paid for your notice period.

On the other hand, there are people on this forum, including me, who have fought and won a battle against rate cuts but you will only win if you are prepared to walk away from the contract and it can be a bloody battle. Remember, agents do this stuff every day and we do it quite rarely so decide now if you are willing to fight the fight.

Good luck!

[Mearcat]

As Northernladuk says, it's not entirely clear what's going on here, but generally speaking:

You will have a contract at £X per day/hour for Y months. The agency can not change this without your agreement.

However, they can ask that you accept an amendment to the contract and if you refuse then they will have to consider their options which would include cutting their margin, asking the client to pay more or terminating your contract.

You should speak to the client and ask them what's going on. My starting point would be that I had agreed the contract and I expect them to show good faith by honouring it not changing it half way through.

It could be the agency doing a fast one on you or it could be that the client is cutting the amount they are paying the agency and this cut is being passed on to you.

At the same time, you want to try and find out how much the agency is being paid and make sure their margin is reasonable, they should be taking 5-15% of the contract value at most. Tread very carefully here. Some clients will give you this information if you ask and others won't. The agency may also get very pissy if they know that you have found out.

This is a high stakes game, if you don't accept the rate cut then they may terminate your contract and you will have no redress other than to be paid for your notice period.

On the other hand, there are people on this forum, including me, who have fought and won a battle against rate cuts but you will only win if you are prepared to walk away from the contract and it can be a bloody battle. Remember, agents do this stuff every day and we do it quite rarely so decide now if you are willing to fight the fight.

Good luck!

Thanks both for your input... It seems that someone working for the other agency found out the rate we were getting and complained that they are getting less, because of this the client wants both agencies to pay and charge the same rates, now that that the other agency has twice as many people working for the client the client wants my agency to lower its rates. I have also found out that my agency was trying to bring an overtime rate that starts after 39 hours instead of the 45 hours I was originally on (using AWRs new rules to coincide with the companies permanent staff) although I am a limited company and it does not affect me. I think he tried this tactic to boost rates. I have asked for a IR35 compliant contract with which he sent me a contract and a op out contract to fill (I know this is also quite unsound but to myself I feel like I am trying to work with IR35 compliance). I know that I am not entitled to the same details of a permanent staff member and I am happy to be on the original rates and terms etc. Now it turns out that he has been back in discussion with the client and says now that I am held in a contract where I am told what to do by the client and I have to work a set number of hours a week I am entitled to have the same pay structure as the permanent staff if I shut down my limited company and use an umbrella company. I now feel that the whole IR35 compliance thing was a complete farce and wonder if he could in fact be right about using AWR for my benefit or even going PAYE. I am now in discussion with a different agency about a different contract. It seems now that clients and agencies alike are exploiting all the conditions now at the expense of the contractor.

[kingcook]

Thanks both for your input... It seems that someone working for the other agency found out the rate we were getting and complained that they are getting less, because of this the client wants both agencies to pay and charge the same rates, now that that the other agency has twice as many people working for the client the client wants my agency to lower its rates. I have also found out that my agency was trying to bring an overtime rate that starts after 39 hours instead of the 45 hours I was originally on (using AWRs new rules to coincide with the companies permanent staff) although I am a limited company and it does not affect me. I think he tried this tactic to boost rates. I have asked for a IR35 compliant contract with which he sent me a contract and a op out contract to fill (I know this is also quite unsound but to myself I feel like I am trying to work with IR35 compliance). I know that I am not entitled to the same details of a permanent staff member and I am happy to be on the original rates and terms etc. Now it turns out that he has been back in discussion with the client and says now that I am held in a contract where I am told what to do by the client and I have to work a set number of hours a week I am entitled to have the same pay structure as the permanent staff if I shut down my limited company and use an umbrella company. I now feel that the whole IR35 compliance thing was a complete farce and wonder if he could in fact be right about using AWR for my benefit or even going PAYE. I am now in discussion with a different agency about a different contract. It seems now that clients and agencies alike are exploiting all the conditions now at the expense of the contractor.

Let the agents/client fight amongst themselves. It really isn't your problem.

The terms and rate has been agreed. Everyone was happy and signed their names on the dotted lines.

Think about the flip side... if you'd found out you were being paid LESS than other contractors from the other agency, do you think your agency would roll over and give you a rate rise?

[Wanderer]

Now it turns out that he has been back in discussion with the client and says now that I am held in a contract where I am told what to do by the client and I have to work a set number of hours a week I am entitled to have the same pay structure as the permanent staff if I shut down my limited company and use an umbrella company. I now feel that the whole IR35 compliance thing was a complete farce and wonder if he could in fact be right about using AWR for my benefit or even going PAYE.

In my experience, it would be unusual though not unheard of for an agency to be acting in the best interests of the contractor unless there was something in it for them.

There is a sticky about the pros and cons of the opt out which I presume you have read. If you are already working for the client then the law is pretty clear that you can NOT opt out.

As for the PAYE vs LTD question, there is less admin with an umbrella but you will pay more tax. There is a good net pay calculator which may help you make up your mind. Do not trust the calculations given to you by umbrella companies or you will be horribly disappointed.