IT contractor to permi after 13 weeks
Discussion
As in the contractor finishes the contract and actually goes to work for the company as a full time employee. I know so long as the contractor is there as a contractor the agency gets paid, but I thought the employment law had changed to state that if they have been there 13 weeks or more the agency does not get a finders fee as it were when the contractor goes perminent.
225 said:Firstly, contractors are not employed by a firm.
Am I right in thinking that if a contractor has been employed at a firm for more than 13 weeks the company doesn't have to pay agency fees?
Secondly, it is all down to the contract with the agency. What does it say?
225 said:Only if the contractor has opted into the Agency Employment Regulations. Most are 'encouraged' (sic) to opt out by agencies.
I thought the employment law had changed to state that if they have been there 13 weeks or more the agency does not get a finders fee as it were when the contractor goes perminent.
>> Edited by JonRB on Wednesday 31st May 23:04
JonRB said:
Am I right in thinking that if a contractor has been employed at a firm for more than 13 weeks the company doesn't have to pay agency fees?
Secondly, it is all down to the contract with the agency. What does it say?
225 said:Only if the contractor has opted into the Agency Employment Regulations. Most are 'encouraged' (sic) to opt out by agencies.
I thought the employment law had changed to state that if they have been there 13 weeks or more the agency does not get a finders fee as it were when the contractor goes perminent.
>> Edited by JonRB on Wednesday 31st May 23:04
Yes I know contractors are not employed by the company as I am a contractor at present so wanted to know about me going permanent and the costs to the company. I thought that would be the case with the agency and firm with a finders fee but just thought there may be a glimmer of hope so that the company does not have to pay them a fee if I go permanent.
225 said:Well you should know better then.
Yes I know contractors are not employed by the company as I am a contractor at present
225 said:Surely that is between the agency and the client? It will be in the contract between them and isn't really of any concern to you, other than the fact that the client may take it into account in the salary they offer you for a permanent position. But again, that isn't really a factor because if the salary isn't what you want then you won't accept the job, surely?
so wanted to know about me going permanent and the costs to the company.
The reason I wanted to double check was that in salary negotiations I wanted as much info as possible, they agency it seems have done the standard thing and will receive a % of my final agreed salary if I go permanent.
It just erks me that they get anything as they in effect do sweet FA, screw me on my daily rate now and then get a big pay off if I go to a permanent role.
It just erks me that they get anything as they in effect do sweet FA, screw me on my daily rate now and then get a big pay off if I go to a permanent role.
225 said:Yep - standard thing as you say.
The reason I wanted to double check was that in salary negotiations I wanted as much info as possible, they agency it seems have done the standard thing and will receive a % of my final agreed salary if I go permanent.
225 said:
It just erks me that they get anything as they in effect do sweet FA, screw me on my daily rate now and then get a big pay off if I go to a permanent role.
Totally agree. I'm even having agencies getting me to fill out the job cover sheet (which they're meant to do)... I mean, what the 
do the do to earn their money.
JonRB said:I'm with you on this!
Firstly, contractors are not employed by a firm.
What does your company's contract with your client (the agency) state?
If you want to try to use employment law to get out of anything you owe, then you had best sort the IR out first vis-a-vis IR35 on your contract(s) to date!
225 said:
The reason I wanted to double check was that in salary negotiations I wanted as much info as possible, they agency it seems have done the standard thing and will receive a % of my final agreed salary if I go permanent.
Fair enough IMHO
225 said:So how did you get the role in the first place? If the amount of effort involved was "sweet FA" then why did you need the agency?
It just erks me that they get anything as they in effect do sweet FA, screw me on my daily rate now and then get a big pay off if I go to a permanent role.
I still don't see what the problem is. The agency found you the contract role and are paying you a contractually-agreed rate and are then billing the client at a (higher) contractually-agreed rate. They'll have tried to get the difference as high as possible, and you as low as possible, but at the end of the day it is something that you have mutually, and contractually, agreed.
The client also have a contract with the agency. If that contract states that if you go perm then they get an introduction fee then so be it. It's nothing to do with you.
Why are you bitching about it? If you don't like it then don't take the perm role. That's business, and that's contracts. If you don't like contracts and sticking to them then you shouldn't have become a contractor. The clue is in the name.
The client also have a contract with the agency. If that contract states that if you go perm then they get an introduction fee then so be it. It's nothing to do with you.
Why are you bitching about it? If you don't like it then don't take the perm role. That's business, and that's contracts. If you don't like contracts and sticking to them then you shouldn't have become a contractor. The clue is in the name.
I agree with JonRB, the agency found you the contract, why shouldn’t they get paid for it? You don't have to use an agency in the same way that you don't have to use an estate agent to buy a house.
As I understand it agencies will technically be supplying the services of your ltd company, not you, as you would just be a worker for that ltd company. Therefore, if you go permanent with the client and become a salaried employee it is a separate transaction, the agency has found the client a new employee (you) on a permanent basis and can quite rightly charge a fee for it.
As I understand it agencies will technically be supplying the services of your ltd company, not you, as you would just be a worker for that ltd company. Therefore, if you go permanent with the client and become a salaried employee it is a separate transaction, the agency has found the client a new employee (you) on a permanent basis and can quite rightly charge a fee for it.
This is almost like some of the threads on www.contractoruk.com
As a recruitment consultant of 10 years+ now the reality of the situation concerning charges to companies tend to work as follows:
The margin the contractor charges to the client is for the contractor. What the agency charges is on top, not taken from the contractor, they tend to be separate budgets and they also tend to be agreed when a client and agency exchange T&C's, the agency charge is very rarely the sort of percentages normally banded about i.e. 25%, 35% etc. for the majority of PSL clients I have I normally charge the client between 7.5% and 10% - if I don't agree to this then they won't use me - simple as that.
Concerning going from contract to perm, yes the agency normally gets a calculated percentage of the equivalent of the contractor's annual salary, again this is something the client will insist upon when an agency signs the T&C's and is typically 15%. Additionally some companies will reduce the employee's annual salay for the first year and bump it up with bonuses etc. to enable them to pay the agency less of a percentage as all "temp to perm" fee's are based on the annual salary only.
Now with all due respect, and I mean this sincerely, why is it contractors are so concerned with what agencies charge? With other sales industries I can understand it i.e. Estate agents - because an Estate Agent charges both buyer and seller, but with Recruitment Agencies we only ever charge the client, everything the contractor gets in terms of getting the role, submission of invoices, timesheets, rate and contract negotiations, IR35 friendly contracts, BACS and CHAPS transfers (and if you have a good agent like me - beers and lunch every 3 to 4 weeks) is all FREE!
Going back to what the agency charges the client, honestly, these are separate monies to those you as a contractor are charging, the client budgets for them separately as they will be aware of the margins agreed with their preferred suppliers.
However if you don't like agencies and can find a company that will let you go direct then great! All you got to do is collate a list of companies you have heard may be looking for contractors with your skill set in the next 4 weeks and ring them up!
- it's called cold calling, you'll love it!! Having got through that hurdle, all you will need to do is swot up on a bit of contract law - because those 10 page IR35 friendly contracts are a doddle to draw up, negotiate your rate with the client, don't worry, after all it's not the line manager's money or budget, then your in!! All you will have to worry about after that is when the company decides to pay those invoices you keep attaching with your timesheets, still if you allow for the fact that they will make you wait 90 odd days on average before releasing payment and you can keep chasing (credit control) then you'll be fine...
Romanymagic said:
The margin the contractor charges to the client is for the contractor. What the agency charges is on top, not taken from the contractor, they tend to be separate budgets and they also tend to be agreed when a client and agency exchange T&C's, the agency charge is very rarely the sort of percentages normally banded about i.e. 25%, 35% etc. for the majority of PSL clients I have I normally charge the client between 7.5% and 10% - if I don't agree to this then they won't use me - simple as that.
Going back to what the agency charges the client, honestly, these are separate monies to those you as a contractor are charging, the client budgets for them separately as they will be aware of the margins agreed with their preferred suppliers.
Going back to what the agency charges the client, honestly, these are separate monies to those you as a contractor are charging, the client budgets for them separately as they will be aware of the margins agreed with their preferred suppliers.
With all due respect, that is completely disingenuous. The client has a budget for a project. They sit down and say "right, we don't want this contractor to cost us more than £50ph. We'll need to give the agency around £10ph so we'll tell the agency to only send us CVs of people who want £40ph or less". You can't honestly tell me it's anything other than that. You imply that the contractor's rate and the agency margin are somehow unconnected, but it all comes out of the project budget and you can't dice it any other way than the fact that of the £x the client has budgetted for the resource, some will go to the agency and some to the contractor.
Romanymagic said:
Now with all due respect, and I mean this sincerely, why is it contractors are so concerned with what agencies charge? With other sales industries I can understand it i.e. Estate agents - because an Estate Agent charges both buyer and seller, but with Recruitment Agencies we only ever charge the client, everything the contractor gets in terms of getting the role, submission of invoices, timesheets, rate and contract negotiations, IR35 friendly contracts, BACS and CHAPS transfers (and if you have a good agent like me - beers and lunch every 3 to 4 weeks) is all FREE!
However if you don't like agencies and can find a company that will let you go direct then great! All you got to do is collate a list of companies you have heard may be looking for contractors with your skill set in the next 4 weeks and ring them up! - it's called cold calling, you'll love it!!
Having got through that hurdle, all you will need to do is swot up on a bit of contract law - because those 10 page IR35 friendly contracts are a doddle to draw up, negotiate your rate with the client, don't worry, after all it's not the line manager's money or budget, then your in!! All you will have to worry about after that is when the company decides to pay those invoices you keep attaching with your timesheets, still if you allow for the fact that they will make you wait 90 odd days on average before releasing payment and you can keep chasing (credit control) then you'll be fine...
However if you don't like agencies and can find a company that will let you go direct then great! All you got to do is collate a list of companies you have heard may be looking for contractors with your skill set in the next 4 weeks and ring them up!
- it's called cold calling, you'll love it!! Having got through that hurdle, all you will need to do is swot up on a bit of contract law - because those 10 page IR35 friendly contracts are a doddle to draw up, negotiate your rate with the client, don't worry, after all it's not the line manager's money or budget, then your in!! All you will have to worry about after that is when the company decides to pay those invoices you keep attaching with your timesheets, still if you allow for the fact that they will make you wait 90 odd days on average before releasing payment and you can keep chasing (credit control) then you'll be fine...
Oh, blimey, don't get me started on this.
* It's not free - it's coming out of the commission / margin between the contractor and client. Or for those who aren't familiar with contracting, that's a percentage of each and every pound that the client pays for the contractor, regardless of the length of the contract. This is different to permanent recruitment where the employer pays a fixed percentage of the first year salary or, indeed, an Estate Agent getting 2% of the sale price. You don't buy the services of an agent for contract recruitment - you rent it.
* Rate and contract negotiations are NOT on behalf of the contractor, it's to get the client to pay the most and the contractor to accept the least. Don't claim you're doing contractors a service by negotiating rate - we're all in business to make money for our own company, and agencies are no different.
* IR35 contracts are available from PCG and I haven't yet come across an agency contract since IR35 started that I haven't had to extensively rewrite and negotiate over in order to be IR35 compliant to my satisfaction.
* And as for factoring, I had to sue an agency once who thought that because the client hadn't paid them that absolved them from paying my invoices.
So that leaves beers with someone I don't necessarily get on with.
Sorry, but if clients weren't so hung up on using agencies and advertised directly on JobServe (or any one of numerous other matchmaking websites, because let's face it, matchmaking is what it's all about - matching the skills of the contractor to the requirements of the client) then I'd have no qualms about going direct and using a small business factoring service operating on a fixed percentage - fully disclosed to me and working on my behalf - to cover the one and only service most agencies purport to offer on an ongoing basis throughout the life of the contract (and to be fair, most do that admirably - I've only had to sue one so far).
Honestly, it’s laughable. Agents really believe this kind of crap too.
Agents (sorry, ‘Recruitment Consultants’ ) are a necessary evil, just like Estate Agents, Car Dealers, Brokers and any other middleman that is necessary because the average buyer or seller doesn’t want to deal directly with each other.
Edited by JonRB on Tuesday 6th June 21:43
JonRB - by the style of your comments you appear to have had some bad agency/agent experiences as a contractor.
It may be laughable to you Jon but yes I do believe what you purport to be "crap". From my perspective my job is to offer a service to both client and contractor. Perhaps the difference for me is that the agency I work for is owned by an ex-contractor so our agency model is different from the norm. Prior to this role some 10 years ago, I originally worked in clerical administration so I am not of the barrow boy/ex trader ilk that a good percentage of "recruitment consultants" come from.
Of course we work to make money but I don't have to leave my integrity at the door each day. We do not have targets so consequently I don't need to pressure candidates into roles, if they decide the role is not for them then I continue to try to find them a suitable role.
We provide PCG approved IR35 contracts, which are also QDOS and ACOUNTAX approved.
Some clients do advertise on JobServe, however they then discover when they advertise a role for say a Citrix Support person with experience within Derivatives they end up with 300 CV's from Helpdesk Support to Systems Administrators apply and it's just too much agro having someone sit there and sift through all the CV's.
You were unlucky with the agency you had to sue, how the hell did they justify that stance? They pay you regardless and then sue the client...so I agree with you on that particular issue.
Regarding rate negotiations, wrong, wrong, wrong, I work on behalf of the contractor as well, why? Because if the contractor is not getting at least current market rates, I lose the contractor, who will end up going to work for another company. I am down a contractor and I have an unhappy client who wants to know why I place contractors with them that then leave to go to a competitor - and believe me this happens - I advise the client on current market rates and the type of roles I tend to get are quite niche i.e. OTC Derivatives, Unit Trusts, Fund Accounting, Energy Trading etc.
Finally and apologies for responding back to your points in a bit of a roundabout fashion - my daugter is plaguing me about re-negotiating pocket money as I type this - regarding my comments on two separate amounts for contractor and agency, I see what you are saying but with the majority of our clients they do literally split the amounts into two parts - but then they are big multi-nationals and perhaps different companies do different things in terms of arranging their budgets, all I know is in terms of margin, mine are fixed by the client many moons ago and they are non-negotiable.
I apologise if my earlier posting was offensive in any way, however it bugs me that I have to keep sticking up for a profession I enjoy and one that I feel I am honourable about.
Cheers
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