Contractors’ Questions: Can I bypass the agent and go direct?

Contractor’s Question: I landed a freelance gig through a recruiter, initially booked for 4 days, it's now a year on a rolling day rate with daily commission to the recruiter (a fifth of my day rate no less!).

What are the rules and regulations regarding me approaching the company I freelance for to work directly, so I bypass the recruiter? Their take is a bit hefty for my liking.

Expert’s Answer: As a contractor in this situation, you must appreciate what you have signed up to. It would be prudent for you to reread the contract, paying particular attention to any restrictive covenants. Such clauses are legally justifiable as they are designed to protect the agency’s investment. Depending on what is written down, the contract could prevent you from working directly for the client company and other related organisations.

That being said, it is imperative that the recruitment consultant at the agency does not abuse these clauses; the restrictions must be reasonable. The complexity of the work that is being done will also be a factor. So, for example, a restrictive covenant is more likely to be reasonable where it concerns a highly specialised technical field than a covenant applied to a sales assistant in a retail store. Again, this boils down to what you do for the client company.

Beware that problems can escalate during the renewal period; the recruitment consultant could pressurise you to accept a higher percentage cut in their fees. You have stated that the recruitment consultant already gets a fifth of your daily rate. If you are being coerced to work under unacceptable conditions, you should seek professional legal advice.

Keep in mind, the courts have previously found restrictive covenants to be unreasonable. Case in point is Schroeder Music Publishing Company Limited v Macaulay which concerned the restraint of trade doctrine. The pertinent question is whether the restrictive covenants are protecting a legitimate interest of the recruitment agency. If the answer to that is yes, then the relevant clauses will be deemed valid and enforceable.

In your situation, it could be argued that the recruitment agency is entitled to prohibit the contractor from working directly for the client company, because the agency may have spent a substantial amount of time and money during the recruitment process and would be operating at a loss if the restrictive covenants were not binding on the parties.

Consequently, I would suggest that you familiarise yourself with the contractual agreement before the renewal date. If you are unhappy with any terms or conditions, you should voice your concerns to the recruitment agency. The fact that you are contemplating working directly for the client company is also something that should be brought to the attention of the recruitment agency. While one cannot rule out the possibility of litigation, an amicable conclusion is probable.

The expert was Mekael Rahman of Lawdit Solicitors.

Thursday 10th September 2015