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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 50203
Experience:  Qualified Employment Solicitor
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I work as a contractor company through a recruitment

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I work as a contractor for a company through a recruitment agency. My contract with the agency has a clause in it that states I cannot provide services to the same company within 12 months of terminating my contract with their agency. What I haven’t been able to find in my contract is anything that states what the consequences would be should this situation occur. I’ve contacted my agency and they weren’t able to answer the question, and despite several chases they still haven’t come back to me. Can you advise if they have any legal rights to impose any penalties if they are not specified in the contract please?
Many thanks.
Hello, my name is***** am a qualified lawyer and it is my pleasure to assist you with your question today. What losses are they likely to suffer as a result?
Customer: replied 2 years ago.
Are you referring to the agency or the company?
Customer: replied 2 years ago.
Sorry Ben, didn't say hello first!
Customer: replied 2 years ago.
Are you still there Ben?
Yes I am here, sorry it is a busy morning. I was referring to the agency
Customer: replied 2 years ago.
I am guessing they would suffer the loss of a finders fee and the potential commission for my contract (not sure how much these would be)
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. However, an agency can try and protect its legitimate business interests if someone was to go and work directly with the end user as a result of their introduction. They cannot prevent someone from doing so but they can seek compensation for any losses suffered. As you have identified, these will only really be limited to any fees or commission they would have earned by keeping you on their books and continuing to ire you out to the company. However, that does not mean that they can make you liable for 12 months’ worth of fees just because that is how long the restriction is for. Usually it is a reasonable period and if you look at some of the legislation it would generally be for approximately 8 weeks following the termination of the contract. So there may be some liability for loss of business which they could try and pursue you for but it will not be as bad as asking you to pay for a year’s worth of fees, nowhere near in fact. I hope this has answered your query. I would be grateful if you could please take a second to leave a positive rating (3, 4 or 5 stars) as that is an important part of our process and recognises the time I have spent assisting you. If you need me to clarify anything before you go - please get back to me on here and I will assist further as best as I can. Thank you
Customer: replied 2 years ago.
Thanks Ben but I don't really understand how penalties or liability can be applied when it isn't stated in my contract.
My contract states the following:
Protection of the Agency’s Business
10.1 Unless an introduction or engagement is Employment Business and not ‘Opted Out’,
10.1.1 The Service Provider will not (other than under a contract with the Agency) provide services to the Client, either during a Contract, or within twelve months following the later of (i) introduction, and (ii) the end of the most recent Contract;
10.1.2 The Service Provider will inform the Agency immediately it becomes aware if, within twelve months following the later of (i) introduction by the Agency to the Client, and (ii) the end of the most recent Contract, the Client (other than through the Agency) makes an offer of employment or engagement direct to any person introduced or who has provided Services on the Service Provider’s behalf.
10.2 An introduction is deemed made on the Agency providing the Service Provider with sufficient information for the Service Provider to identify the Client introduced, unless the Service Provider already has a connection with the Client and so informs the Agency within 7 days, and (if requested) provides documentary evidence.
10.3 Subject to the above, a Contract is not exclusive; the Agency acknowledges that the Service Provider enters this contract in the course of its business of providing services to its customers, and the Service Provider remains at liberty to also provide services to third parties. It is the Service Provider’s responsibility to ensure that no conflict of interest arises.Re 10.2 I already have a connection with the Client as I work there through this agency.
I'm not looking at a permanent role, it's just that the Client no longer allows contracts that don't go through their preferred supplier which, unfortunately, my agency isn't.Additionally, re 10.3, it mentions it is my responsibility as Service Provider to ensure no conflict exists. But again, I am confused how they could potentially make me liable for something that isn't explicity stated in my contract.Sorry for the long message and I look forward to receiving your further response.
It is certainly not a requirement to specify exactly what the liability is - that would stem from the actual breach. It is implied that there will be liability if you were to breach the restrictions so the liability would be whatever the losses incurred from the breach are, although as mentioned it will be limited to whatever is considered reasonable in the circumstances. It is very rare for restrictive covenants to go into specifics about what exactly you would be liable for. Hope this clarifies?
Customer: replied 2 years ago.
Thanks Ben. So, if I'm reading what you're saying correctly, I need to agree what these are with the Agency before I do anything to cover myself?
Customer: replied 2 years ago.
Also, as my Agency has been notoriously bad at responding to my questions, is there a reasonable timescale by which they should come back to me with their response?
I d not think that the agency will necessarily agree to specific liabilities which they will only pursue you for in the event of a breach, especially if you want that in writing. It would also put them on notice that you are anticipating breaching the restrictions. In a breach of contract claim, such as this one, it is not what you agree with them that will govern what they pursue you for, but what a court considers reasonable in the circumstances and that can vary but it will be along the lines of what I discussed above. So if you are expecting a list of specific things and know that it will be limited to these and nothing else, that won't be the case unfortunately. As to replies by the agency, sadly that is down to the, there is no legal requirement on them to reply within a specified period of time.
Customer: replied 2 years ago.
So, from what I'm reading, my only option is to avoid a breach, because otherwise I won't know what I'm liable for? This just doesn't sound right to me as that doesn't enable me to make a decision on whether or not it is financially or otherwise beneficial or not to take the other opportunity. I don't understand how that can possibly be right as it sounds as though I have no protection and could be liable for anything the agency wanted to impose (without having to take it to court).
Ideally yes you do not want to be breaching the restriction but even if you do, it does not mean you automatically have to pay them - they have to take you to court and win to force you to pay up, which they may never do. So they can claim all hey want from you but until they actually win in court, you cannot be forced to pay.
Customer: replied 2 years ago.
Oh right, so if they say I'm liable for something, I don't pay until it goes through the court? So when you say 'have to take me to court' they do indeed have to do that to get any money from me?
Oh yes certainly, they cannot just say you owe us £10k for the breach, you have to pay us within a week. Well...they can say that but you cannot be forced to do it, that is just a demand in their part, you are not legally obliged to pay it. The only pay they can force you to would be to take you to court and win, obtaining a court judgment against you. But they have to go through the whole process and also justify that what they are seeking is actually reasonable. So there is a long way to go before you have any sort of legal obligation to pay anything. If your original question has been answered I would be grateful if you could please quickly rate my answer by selecting 3, 4 or 5 starts at the top of the page - 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
Ben Jones and other Employment Law Specialists are ready to help you
Customer: replied 2 years ago.
Thanks Ben. That clarifies it for me.
You are welcome, all the best