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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
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I am a contractor operating through a recruitment company.

Customer Question

Attachment: 2015-04-15_181642_jamie_lewis_countersigned_contract_contractor.pdf

I am a contractor operating through a recruitment company. I would like to cease working via the agency and work directly. I would like someone to review my contract and provide guidance on the best way to achieve this. The client is also wanting this outcome. I can upload a PDF of my contract and addendum.

Submitted: 2 years ago.
Category: Employment Law
Expert:  Ben Jones replied 2 years ago.
Hello, my name is ***** ***** it is my pleasure to assist you with your question today.
Employment agencies have traditionally been eager to protect the revenue they get from supplying temporary workers to end user clients. They normally do so by including certain "restrictive covenants" or clauses within their contracts to either prevent a contractor from taking up direct employment with an end user, usually for the duration of the contract plus an extended period after termination, or which imposes a substantial fee if they do. The civil courts have on many occasions deliberated whether such "restrictive covenants" are fair and reasonable and there is still no single definitive answer.
Under UK and EU legislation there have been attempts to allow workers to seek employment wherever they choose, without restriction, thus removing any restraint of trade prohibitions. The most relevant piece of legislation in this respect is Regulation 10 of The Conduct of Employment Agencies and Employment Businesses Regulations 2003.
Where a temporary contract between an agency and an end user contains provisions to charge fees in a situation where the worker is taken on by the end user, it must now also provide the option of an "extended period of hire" where the end user client continues to pay the agency margin while engaging the worker directly (or through another agency).
Where there are provisions for the payment of a fee and/or an extended hire period, the Regulations state that they are unenforceable beyond 8 weeks from the termination of the contract (or, if longer, 14 weeks from the start of the contract).
So effectively this creates a situation where an end user client who wishes to employ a contractor directly (or transfer the contractor to another agency) will have 3 options:
1. Pay the transfer fee stipulated in the contract.
2. Pay the extended hire fee stipulated in the contract.
3. Terminate the contract (presumably with due notice) and wait for the specified 8 or 14 week period to end.
I hope this has answered your query. Please take a second to leave a positive rating, or if you need me to clarify anything before you go - please get back to me and I will assist further as best as I can. Thank you
Customer: replied 2 years ago.

OK that is all good and useful information, thank you.

Further to this, the client's contract stipulates that after 6 months they can hire a contractor without penalty, would the fact that this contradicts my restriction clause make it nullified or are they not related legally?

If I give 1 month's notice now, then wait 8 weeks, I would lose 8 week's income and we would be at my 6 month point anyway so that option isn't really viable.

The agency have repeatedly been paying me 'late'. I submit time sheets and an invoice on a Monday and get paid on Wednesday. Legally speaking they aren't late because they included a 7 day leeway period after invoice, but in reality it makes it very difficult for me not being able to predict when I will be paid, which is a primary motivator for wanting to go direct.

Secondary is the high margin they make on my day rate, which given they did little more than an introduction is not justifiable.

Specific to the restriction clause in my contract would you say it was enforceable based on your experience?

Thanks

Jamie

Expert:  Ben Jones replied 2 years ago.
The issue is that they are two separate contracts and between different parties - the 12 months would apply directly to you, the 6 months to the company. So eve though the company may not be prevented from hiring you after 6 months, you may be personally prevented from joining them due to the restriction in your contract.
Such restrictions can be enforceable if they go to protect the agency's legitimate business interests. In this case they are generating an income from hiring you out - bypassing them would mean an immediate loss of business, which is why restrictions are in place to ease that and soften the hit. Whether 12 months is too long is something only a court can decide on though so unless it is challenged you would just be faced with a difference of opinion between what you believe is fair and what the agency does.
If your original question has been answered I would be grateful if you could please quickly rate my answer - it only takes a second to do and is an important part of our process. I can still answer follow up questions afterwards if needed. Thank you
Customer: replied 2 years ago.

I am looking to get the agency to nullify the clause. They have assured the client verbally that they wouldn't look to enforce it, can you help me with some simple nullification wording, that I could get them to sign?

It would be specifically for the restriction clause preventing me from working directly for Aspen once my contract terminated. Specifically I would want the nullification to be worded such that I could serve notice immediately, but not wording it so obvious that this was my intention as this would put them off doing so.

Once I have that we should have gone as far as we can I think.

Thanks

Jamie

Expert:  Ben Jones replied 2 years ago.
Thank you for your response, which I will now review. I will get back to you as soon as possible. Please do not respond to this message as it will just push your question to the back of the queue and you may experience unnecessary delays. Thank you
Expert:  Ben Jones replied 2 years ago.
Hello again, there is no specific wording to ‘nullify’ the clasue as such – you are really looking for some ort of undertaking fro them that they would not enforce the contract, s a simple wording as follows, as long as it is accepted by them, would suffice:
We, [agency name] hereby undertake to remove the following clause from the contract between ourselves and [your name] dated [date] and prevent any further reliance on our part on this section of the contract. We further undertake not to seek any future action in relation to this clause and release [your name] from the restrictions of this part of the contract.
[insert clause wording here]
Hope this helps?
Ben Jones and other Employment Law Specialists are ready to help you
Customer: replied 2 years ago.

Awesome, thanks for your help

Customer: replied 2 years ago.

Quick follow up question. I have another limited company, if I had agreement from the company. Could I serve notice on my current contract and strike up a new contract with my other limited company?

Happy to pay a bit more for further assistance.

cheers

jamie

Expert:  Ben Jones replied 2 years ago.
Hi when you say you have the agreement of the company which company are you referring to please?
Customer: replied 2 years ago.

So in my contract it is between my main Ltd company and the agency.

I then physically work for the healthcare company.

My limitations are pointed at my main Ltd company but I do have another Ltd company that I could use if it would free me from this contract.

I previously sent you a copy of my contract, do you think based on its wording that I could serve notice and then begin working directly and invoice from my other company?

The healthcare company director is on board.

Expert:  Ben Jones replied 2 years ago.

ok it is possible to do so because the specific restriction is against the Contractor as defined in the agreement, that being the specific limited company. SO contracting through a different company, which is a separate legal entity, can avoid that