Can an end client demand to know what we take as an agency?

[W4NTED]

I have a sub contractor contracting through my company. End client pays e.g. 60 an hour and I pay contractor e.g 40 an hour.

End client manager speaks to my contractor and says we can no longer pay you 60 an hour and my contractor says hang on a minute I don't get 60 I get 40 - end client is furious and says your agency is a rip off they are taking too big of a cut!

End client emails me and asks what we charge them and what we pay our contractor who is placed there - is it a legal requirement for me to reply and disclose this information!? It does not state anywhere in our contracts that I need to disclose this information to the end client and I am not even sure how they can ask me this?

Thanks

[NormalWisdom]

You have no legal obligation to reply but he can easily find out (as it appears he did). I contract in IT and know what % my agent skims off the top - Anything over 15% is taking the piss for contracts over 6 months (IMO) and I will often use some of that ceiling to negotiate a rise.

A lot of agents will negotiate exclusivity and then take much less of a margin as the client will come to them.

Sadly too many agents take the piss (IME)

[dacouch]

What business is this in?

If it's in say the building trade, the mark may be justified to over additional costs such as insurance etc

[Terminator X]

Imho your man should have kept his mouth shut, have a word with him about that. Your margin is your business and no one elses. I wouldn't say albeit the consequence might be that you lose the business, can you afford that? If not perhaps offer a discount or can you put a direct employee in there instead?

TX.

[JustinP1]

W4NTED said:

my contractor says hang on a minute I don't get 60 I get 40

You have no legal requirement to disclose anything about your contract with your contractor.

In the same way, the solicitor you pay a company £150 plus VAT an hour for isn't earning £1200 a day/ £250k a year either.

Your contractor shouldn't be mentioning *anything* about your contract with him at all. That's seriously unprofessional, and has now left you seriously compromised.

You need to tighten up your contracts. Ours with freelancers is that they are not allowed to discuss their employment with us in any way with a client, or even mention that they do outside or freelance work. That is put mentioned as a serious fundamental breach - and if anyone said what your chap had said, that would be the last day's work they did for me.

While you are paying someone to do a job, they need to represent your interests, not tout for their own business.

[theboss]

JustinP1 said:

You need to tighten up your contracts. Ours with freelancers is that they are not allowed to discuss their employment with us in any way with a client, or even mention that they do outside or freelance work.

If you're going to subcontract work its surely better to be reasonably transparent about it. What do you expect your freelancers to say when they're quizzed by inquisitive end client staff?

[TurricanII]

It sounds like the end client manager is very naive asking stupid questions (i.e. what is your profit margin!).. Do they not know that you are an agency and that you take a slice/subcontract the work out - it sounds like they may not know this if they are talking to the subcontractor about the rates. Does your business hide the fact that it provides contractors? If so then perhaps that could be clarified.

In your shoes I personally would hope to speak to someone higher up in the client company and let them know that you are worried that when the 'end client manager' rocks the boat with questions and advice on rates, that they may cause contractors quit which may impact the client's continuity of service.

[Pit Pony]

To protect yourself, you need to have some extra bits in the contract(s)

1) Client NOT allowed to discuss rates with Contractor. and vice versa.
2) Contractor not allowed to work for client for 12 months after end of contract (without payment of a %age of salary or fee. (an introduction fee) and vice versa.

If I were the OP, I'd say to the contractor "If the client decides that they will only pay £50 an hour, I can't afford to pay you more than £35, and that splitting the fee reduction down the middle."
I'd say to the client "£50? That's fine, please find enclosed new contract with new terms"



As a contractor, I don't really care what the agency makes, because I've agreed a rate that I'm happy to do the job for, and it's my own stupid fault if I quoted too low, but at the same time, I try to find out so that I know how much I might be able to push the rate.

[Pit Pony]

theboss said:

JustinP1 said:

You need to tighten up your contracts. Ours with freelancers is that they are not allowed to discuss their employment with us in any way with a client, or even mention that they do outside or freelance work.

If you're going to subcontract work its surely better to be reasonably transparent about it. What do you expect your freelancers to say when they're quizzed by inquisitive end client staff?

I made the mistake of telling (when asked) what my hourly rate was. The hiring manager, then let me go, as I was "earning" more than him. And that upset him.


He really didn't understand the world of contracting, and thought that I was actually seeing my hourly rate x 47 weeks X 40 hours, and hadn't understood that I was paying £15K in expences a year to be at the wrong end of the country, (plus accountancy and professional insurance).

I should have said "my contract is with the agency, and I have no idea what you pay them, but what they pay me, isn't really enough to keep me beyond the end of the contract"

I ended up with a 5 week gap, which was costly.

[spikeyhead]

As a contractor, I've usually known what agency cut was and come renewal time it would be considered in the negotiations.

[JustinP1]

theboss said:

JustinP1 said:

You need to tighten up your contracts. Ours with freelancers is that they are not allowed to discuss their employment with us in any way with a client, or even mention that they do outside or freelance work.

If you're going to subcontract work its surely better to be reasonably transparent about it. What do you expect your freelancers to say when they're quizzed by inquisitive end client staff?

It depends what the question is, however I'd suggest:

"With respect, I'm not really at liberty to discuss that with you." would always suffice.

I've had plenty of people work for me, that I knew were employed by someone else. Not once have I been bothered or thought it legitimate to ask them how much they earned a year or a job.

[theboss]

Pit Pony said:

theboss said:

JustinP1 said:

You need to tighten up your contracts. Ours with freelancers is that they are not allowed to discuss their employment with us in any way with a client, or even mention that they do outside or freelance work.

If you're going to subcontract work its surely better to be reasonably transparent about it. What do you expect your freelancers to say when they're quizzed by inquisitive end client staff?

I made the mistake of telling (when asked) what my hourly rate was. The hiring manager, then let me go, as I was "earning" more than him. And that upset him.


He really didn't understand the world of contracting, and thought that I was actually seeing my hourly rate x 47 weeks X 40 hours, and hadn't understood that I was paying £15K in expences a year to be at the wrong end of the country, (plus accountancy and professional insurance).

I should have said "my contract is with the agency, and I have no idea what you pay them, but what they pay me, isn't really enough to keep me beyond the end of the contract"

I ended up with a 5 week gap, which was costly.

Sorry when I suggested transparency I meant in terms of who works for who, particularly in the context of subcontractors, rather than financial specifics.

Its a common scenario for me to work for intermediate consultancies and resellers who commonly request that I "pose" as staff, they'll issue me an email address at their own domain, and so on.

I always make it clear that I won't comply with this request - end clients almost always end up asking if I'm employed or subcontracted and I'll always tell them the truth!

I had a similar situation to the above where I once worked in a team of extremely low paid guys and they all knew my rate - there was a factor of 5 discrepancy in income... It was almost embarrassing.

[Olf]

A lot of the morals on this depend on whether the agency was the finder or just a facilitator. Contactually it's simple - you either have those confidentiality clauses in your contracts or you don't.