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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
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I am an IT consultant, I have started contracting through a

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I am an IT consultant, I have started contracting through a mentoring and coaching company who provided me with training in exchange for 15% of my earnings on the first 65 days and 10% on the remaining of the contract, including any subsequent renewals. I don't feel it's fair for them to get 10% of my daily rate forever, given they price the total cost of the services they provided at £4000 + vat. Is there a way to keep working with my current client and not having to pay this company 10% forever?
Hello are all the details contained in the contract you have?
Customer: replied 2 years ago.
yes they are, the contract states that I have to undergo at least 65 working days through them, and they are entitled to a 15% on the first 65 days, and 10% on the remaining of the contract. It also states that all subsequent renewals are to be made through them.
Is the contract for a specific period of time or indefinite?
Customer: replied 2 years ago.
the contract does not state start and end date, thus I'd say it's indefinite.
Ok thanks leave it with me please I will respond fully later this morning thanks
Customer: replied 2 years ago.
would you prefer me to send you a copy of the contract?
You can attach it on here if you can thanks
Customer: replied 2 years ago.
I've attached contract and terms & conditions. Thanks
Thanks for your patience. It is not unlawful for a consultancy or agency to levy ongoing charges for work gained through them. There could be different ways of doing this – it could be a one off charge on successful obtainment of work, or it could be an ongoing charge. One thin g that won’t help much here is that this will not be subject to normal consumer legislation on unfair terms because you are not a consumer. You are a business and as such are assumed to have equal bargaining power with the other business you are dealing with and as such should be able to negotiate the terms you are going to work under and anything which has been agreed is assumed to have been accepted by you. From the terms I see that if you were to go and breach the requirement to contract through them, they can hold you liable for the initial training costs. That may be the case but at the same time they will have to justify that retrieving such costs is reasonable in the circumstances and is not a penalty clause and this will depend on how long since the training it has been and what benefit they have obtained as a result of providing such training. This is your basic legal position. I have more detailed advice for you in terms of the law on recovery of training costs, which I wish to discuss so please take a second to leave a positive rating for the service so far (by selecting 3, 4 or 5 stars) and I can continue with that and answer any further questions you may have. Don’t worry, leaving a rating will not close the question and we can continue this discussion. Thank you
Ben Jones and other Employment Law Specialists are ready to help you
Thank you. Whilst it is legal to have training costs recovery clauses, employers must be cautious to ensure that the amount of costs they are trying to recover is a genuine pre-estimate of the damages which they have suffered as a result of the person leaving early or in breach. In the event that it is not, such clauses could be considered a penalty against the employee, which would make it legally unenforceable. Therefore, if the employer has derived some benefit from the employee undertaking the training course during the fixed repayment period (e.g. where an employer has been able to charge customers more for an employee’s services by virtue of that training or qualification) then the amounts which may be recovered from the employee should be reduced to reflect that benefit. The contract should contain a sliding scale of repayment whereby the repayment amount reduces according to the length of time the employee remains with the employer after the training has been completed. For example, 100% of the fees to be repaid if the employee leaves within 0-12 months after the training has finished, 50% if they leave 12-24 months after, 25% if they leave 24 - 36 months after. There are a couple of ways for the employer to try and recover these fees - by deducting them direct from the employee's pay, if no such clause exists - by taking them to court. If the matter goes to court, it would be for the employer to show that the repayment clause was reasonably drafted and that the costs they are trying to recover are reasonable in the circumstances.
Customer: replied 2 years ago.
I have rated you five stars as your response has been quick and pretty exhaustive. But I need to discuss a few more details with you.
First of all, they claim they are not an agency, therefore being normal for a recruitment agency to retain a percentage of the contractor's earnings does not imply that it is normal for a training provider to do the same (in my opinion).
Second, they quantify the value of the training package they provide in £4000 + VAT, and they state that if I were to leave them before 65 working days, they may force me to pay the remaining of the unearned amount. Given I have passed the 65 days, and given my fee is £450 per day, I have already paid to them £4387 + VAT, and for the remaining of the contract (about three more months) they will keep retaining 10% of my profit. Which means to me that the training package they provided has been repaid.
Now, I am working very closely with my client and we have a wonderful relationship, which means a renew is very likely to occur. What would happen if I entered in a contract with my client directly? Given that BITE Consulting haven't specified a repayment plan in case of contract renewal not made through them, what kind of cost they could try to recover if they took me to court?
Hi, sorry I had to go offline earlier. They may say they are not an agency but judging by what they do, in reality they are likely to be. They do offer training to start with but after that they also find you employment and that is what an agency does. A training provider would just offer training and leave it at that, they are going much further than that and are procuring work for you. If you were to go direct with the client and the company was to pursue you then they could try and get compensation for the training or for ongoing losses which they would miss out, those being 10% of contracts for a reasonable period of time. Of course they cannot just claim indefinitely so it would be a reasonable period of time as determined by the court, maybe a few months’ worth. As to the training costs you could try and argue that these have been repaid but a court could still decide that not all revenue from your work has gone to offset the training costs and you may partially still be liable for them. So this is what you are potentially looking at in terms of a claim being made.
Customer: replied 2 years ago.
I feel I need to clarify on the agency matter. They do provide training (how to talk to agencies, how to perform well on an interview, how to write a good cv) but they definitely do not find you any employment. They ask the candidate to apply to a number of jobs every week, but the candidate has to find the job ad, apply for it and attend the interview. I think this is the fundamental difference between them and an employment agency, and I think this is important to understand that the only cost they should try to recover is, in my opinion, the cost for the training they provide.
There's one more thing I'd like to add. If I find another client, I am not obliged to go through them. The problem would only be if I decided to keep working with my current client.
I don't know if what described above makes any difference in legal terms, but I just wanted to give you a clearer overview about the matter.
Thank you. Whilst it does clarify the difference between them and what a more traditional agency would do, legally it does not change much. In the end this is still a formal and legal agreement which was entered between you and them, on equal bargaining grounds. You were not misled on the contents of the agreement, you would have had sight of this and the terms regarding commission so if you agreed to it you would effectively be bound by it. In other words - if you were not happy with being bound by these terms you did not have to sign up to them at the outset. So at this stage you would have certain risks in the event of a breach, although they would be limited to a degree as a court would not award indefinite or ongoing losses to be recovered and they will be capped
Customer: replied 2 years ago.
Thanks for the answer, that does make perfect sense. Another question is how can they prove there is a breach of contract? I could potentially ask the client to hire me directly, and in that case nothing else would be owed to Bite Consulting. Given a contract would be a private agreement between me and my client (for both contract and permanent position), how can Bite Consulting prove I am bypassing them and then breaching the original contract, rather then going with another client or going permanent, which wouldn't represent a breach?
I am sorry if I ask so many questions, but the whole situation looks to me not entirely clear and well defined.
I think the best way for me to handle it is to speak with them and try to come up with a compromise anyway, but I just want to know what would be the worst case scenario, i.e. I breach the contract and they take me to court.
Such situations will never really be entirely clear or defined because there are many variables and factors which may be considered in the circumstances and a different judge on a different day could come up to a different decision to another one on another day. So if we are talking worst case scenario and they go to court they could seek an injunction and damages, which means preventing you from working with the client and getting compensation for damages for your breach, which would generally be compensation for the lost fees they have suffered as a result of you stopping to adhere to the contract - how long for however is anyone's guess, it could be a few weeks, a few months, but it will be capped
Customer: replied 2 years ago.
When you say "preventing you from working with the client", does it mean I wouldn't be able to fulfil any eventual contract in place between me and the client and would have to stop working for them (and then breaching the contract with the client too)?
Is that something the court can enforce?
Yes they can but to be honest it is not done lightly or frequently. Yo have to remember that the reason for doing this would be your initial breach so even if that would result in subsequent breach between you and the client through your own contract, this is irrelevant - the purpose is to deal with the initial breach which is between you and the training provider so that will take priority. But an injunction has to be specifically requested by them first and then the court will only grant it if absolutely necessary, I do not think this is likely here, more likely is just some compensation for damages
Customer: replied 2 years ago.
In case we go to court and the court says I am right and I do not owe any more compensation, could I claim my legal expenses back too?
Not if the overall claim by the business is for less than £10k - then it will be in the small claims court and each party pays own legal fees
Customer: replied 2 years ago.
Do you have a rough idea on how much would it cost me in legal expenses?
You do not need legal representation, it is not a legal requirement. If you do use someone to represent you then it really can vary - it depends on their charge out rates, how much work is needed, etc. I would say for basic representation it will be several hundred to a couple of thousand maybe for something more involved. This is all something you negotiate with them and you can set a cap or stop their involvement at any time
Customer: replied 1 year ago.
Hi Ben, I'm sorry I am replying only now. The possibility of being hired as a permanent employee has arisen in the last few days. My question then would be, how would BITE know if I keep working as a contractor with my actual client or become an employee? Could they force me to share this information? Or worse, could they take me to court even though I have become an employee?
Also, if I worked through an intermediary company (some sort of agency) with the same client, would the same apply?
Hello, thanks for getting back to me. Unfortunately your question has expired as you must post any follow up queries within 7 days of the date of the original question. If you need any further help on this subject please post it as a new question on our site - you may start it with 'for Ben Jones' so that I get it and deal with it as fast as I can. Many thanks
Customer: replied 1 year ago.
Hi Ben, I have just posted a new question. Could you pick it up please?
Yes have just done