Morality of ditching agent at renewal?
Discussion
I dont usually use agencys due to a number of reasons (mainly they thieve to high a cut for their input, but also due to the increased IR35 risk due to cruddy agent-client contracts).
But against my better judgement, i accepted a contract 6mths ago introduced by an agent. It was a bit frustrating, as their contact turned out to be someone I knew. There is a high possibility of renewal as there is a lot of work at the clients, in many different projects. I dont think that agency's deserve fees for renewals; certainly not on the same level as the original contract. Is it feasible or moral to accept a "new" contract at the same client from a different agent on better terms (one who will allow a direct contract with the client)?
But against my better judgement, i accepted a contract 6mths ago introduced by an agent. It was a bit frustrating, as their contact turned out to be someone I knew. There is a high possibility of renewal as there is a lot of work at the clients, in many different projects. I dont think that agency's deserve fees for renewals; certainly not on the same level as the original contract. Is it feasible or moral to accept a "new" contract at the same client from a different agent on better terms (one who will allow a direct contract with the client)?
Whether you think the agency deserves a fee is quite frankly irrelevant. What is relevant is the contractual terms that you / the client has signed up to. I would imagine that the agent will have a 6 month restriction clause in place to stop you from contracting direct with client. It will be the client that gets presented with an introduction fee, not you if you do decide to go direct. You say that the agent has ‘cruddy’ terms with the client. What does this mean? Are they signed to their own terms or the client’s terms? Usually agency terms are very IR35 friendly unless it’s a large agency. Either way, most agents are happy to tweak terms at the contractors request to build in IR35 friendly clauses.
As for the morality question, well only you can answer that one, but ultimately the agent is in business to make money, so has to make a margin. If you were unhappy with the financial terms at the point of placement, then why did you sign up to the contract? The agent must have added some value, otherwise this contact that you already knew would have contacted you directly in the first place to take the contract.
As for the morality question, well only you can answer that one, but ultimately the agent is in business to make money, so has to make a margin. If you were unhappy with the financial terms at the point of placement, then why did you sign up to the contract? The agent must have added some value, otherwise this contact that you already knew would have contacted you directly in the first place to take the contract.
flyingjase said:
You say that the agent has ‘cruddy’ terms with the client. What does this mean? Are they signed to their own terms or the client’s terms? Usually agency terms are very IR35 friendly unless it’s a large agency. Either way, most agents are happy to tweak terms at the contractors request to build in IR35 friendly clauses.
Agency's and the use of, are completely different in my industry than for IT. They are very small and very unknowledgeable. Most infact are just a oneman band. As such they havent had the experience or volumes to have learnt about IR35 issues. This agent sent me their "standard" contract, which I duly sent to a contract specialist, who said that it was so appauling that he couldnt even amend it; it had to be a complete start-again. The specialist gave me a contract which the agent accepted. I have very little confidence in the agent-client contract for the following reasons:
1. The fact that their original contract for agent-contractor was poor
2. They didnt ask any questions of my replacement and immediately accepted it
3. They signed my contract before they had even sent theirs to the client
4. Hence I dont think that the two contracts will be mirrored, leaving me wide open to HMRC investigation.
flyingjase said:
What is relevant is the contractual terms that you / the client has signed up to. I would imagine that the agent will have a 6 month restriction clause in place to stop you from contracting direct with client.
You are correct about the 6mth clause, but I didnt say that I was going to go direct. The client has many projects on the go and many agents trying to get me to go with them. What I was saying was that I could go with another agent, but specifically arrange terms which suit me (ie direct contractor-client contract).flyingjase said:
It will be the client that gets presented with an introduction fee, not you if you do decide to go direct.
As mentioned before, agencies work different in my business. There isnt an introduction fee, but instead they take a cut (25%) of my earnings. So if the client wants to pay £1k per day then I will get £750 and the agent £250. This continues for the entire contract and for any renewals. I think this is excessive, as they do nothing further during the contract other than delay my being paid (as the payment has to bounce through their accounts first).25% does seem quite high. But then if you were happy with the rate YOU get why let it worry you ?
At first renewal I always as the agent to take a cut their rate (as they have spent no money in getting the renewal, I usually get a percent or so).
As to taking another contract with the same client ? It might work, I have heard that these restrictions could possibly be considered "restraint of trade" - but have never heard of any cases proving this either way.
I really doubt the agency would come after you, they will try to put pressure on the client. So it may be that you would be willing but the client not due to this.
At first renewal I always as the agent to take a cut their rate (as they have spent no money in getting the renewal, I usually get a percent or so).
As to taking another contract with the same client ? It might work, I have heard that these restrictions could possibly be considered "restraint of trade" - but have never heard of any cases proving this either way.
I really doubt the agency would come after you, they will try to put pressure on the client. So it may be that you would be willing but the client not due to this.
The cut they are taking is obviously a down point, but I guess the biggest issue for me is their contract with the end client. Maybe if I renew, I could ask to see their contract in order to set my fears at rest. The recent discussion here regarding the contractor who had been investigated by HMRC and lost because of the poor agent-client contract has prompted my unease.
Its funny that no matter what you get paid, sooner or later you get used to it and wish you had more. And knowing that a client is happy to pay 25% more but you arent getting it is a tease.
Finally, is getting offered a job on a different project with different managers (in a different department) but at the same client considered a renewal or a new job? If the latter, then how do I go about getting it? Do I have to get my agent to get in contact with them? It just seems a bit contradictory to introduce and agent to a client so that they can "introduce" them back to me and get a shed load of money.
Its funny that no matter what you get paid, sooner or later you get used to it and wish you had more. And knowing that a client is happy to pay 25% more but you arent getting it is a tease.
Finally, is getting offered a job on a different project with different managers (in a different department) but at the same client considered a renewal or a new job? If the latter, then how do I go about getting it? Do I have to get my agent to get in contact with them? It just seems a bit contradictory to introduce and agent to a client so that they can "introduce" them back to me and get a shed load of money.
Edited by kryten22uk on Sunday 2nd September 14:44
kryten22uk said:
Finally, is getting offered a job on a different project with different managers (in a different department) but at the same client considered a renewal or a new job? If the latter, then how do I go about getting it? Do I have to get my agent to get in contact with them? It just seems a bit contradictory to introduce and agent to a client so that they can "introduce" them back to me and get a shed load of money.
You could get the new requirements issued to you direct as a new purchase order for services on your company I guess. Most clients would prefer not to engage directly though.Edited by kryten22uk on Sunday 2nd September 14:44
Edited by Olf on Sunday 2nd September 14:48
kryten22uk said:
The recent discussion here regarding the contractor who had been investigated by HMRC and lost because of the poor agent-client contract has prompted my unease.
I do think there was more to it that that. The two contracts did not agree on substitution, so they looked at the reality - sadly the client manager went back on his previous written confirmation of arrangements, and said he DID expect personal service. Must say I have always found it easier to get contracts changed at renewal, client wants to keep you, and it is just easier for the agent to make the change than to look for someone else. You can but ask.
Olf said:
You could get the new requirements issued to you direct as a new purchase order for services on your company I guess. Most clients would prefer not to engage directly though.
Not the case in my business. Usually what happens is that a manager highlights a need for resource, gets the budget approved, finds the resource, then works directly with them until job done. The "intimacy" is conducive to direct contracts.Edited by Olf on Sunday 2nd September 14:48
kryten22uk said:
Olf said:
You could get the new requirements issued to you direct as a new purchase order for services on your company I guess. Most clients would prefer not to engage directly though.
Not the case in my business. Usually what happens is that a manager highlights a need for resource, gets the budget approved, finds the resource, then works directly with them until job done. The "intimacy" is conducive to direct contracts.Edited by Olf on Sunday 2nd September 14:48
chucklebutty said:
If you can get the client to change your place of work to another building then I believe there's an EU directive that means it's anti competitive to hold you to 6 months. Checkt eh contractoruk website for more advice.
I have just been moved to a different building.It's not worth them pursuing you for breach of the 6 month clause and there are so many ways to get out of it. Apart from that I was aware anyone had ever won one of these "restraint of covenant" cases anyway.
In any case the only damages he could sue for are the actual loss of his income, which is further limited to the notice periods IIRC (I'm pretty sure that sums it up)
In any case the only damages he could sue for are the actual loss of his income, which is further limited to the notice periods IIRC (I'm pretty sure that sums it up)
You'll only have any success if the client is on your side.
If the client is prepared to lose the agent and/or the agent wants to get further business with the client then the client can just tell the agency to sue them for breach and the agency will probably not bother.
Of course, you'll never get work though that agency again.
However, if the client won't back you then you haven't a hope and you'll find your renewal doesn't happen and you'll be looking for a new client.
If the client is prepared to lose the agent and/or the agent wants to get further business with the client then the client can just tell the agency to sue them for breach and the agency will probably not bother.
Of course, you'll never get work though that agency again.
However, if the client won't back you then you haven't a hope and you'll find your renewal doesn't happen and you'll be looking for a new client.
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