Contractors' Questions: Can I ditch this dull contract to get a better one?

Contractor’s Question: I have hardly any work to do in my current contracting role and don’t see any point in staying for 4 more weeks, especially as I have a contract offer from my old manager at a former client company. From a legal and contractual standpoint, could I likely get out of this gig and accept the other one which my old contact’s told me about?

Expert’s Answer: Without having seen a copy of your contract, much of what I say is based on my experience of what these types of agreement usually include and, in large part, a set of assumptions. With that said, it’s refreshing to receive a query from a contractor looking to escape an engagement rather than fighting to stay in one!

If the contract is a written agreement then there’s no substitute for reading it carefully to see how it impacts you. From experience, most clients will be reluctant to hand over responsibility for part of their business based on a verbal agreement unless their relationship with the contractor is a longstanding one. If the agreement was in fact verbal then you may have greater flexibility to walk away, although each case turns on its own particular facts.

The most crucial thing, however, is to leave on good terms if possible, so as to protect your reputation and to leave the door open to the possibility of further engagements with the same client.

Assuming that your contract was written (as is most often the case), there are generally two distinct types of contracts for services:

  1. Where your client wants you to oversee the general running of a particular part of its business for a period of time; and
  2. Where your client wants you to deliver on a particular set of objectives within a specific timeframe.

If you’re finding yourself with nothing to do then it’s fair to assume that you’ve entered into a ‘general running’ type of contract. It’s worth checking for a clause allowing you to terminate the appointment early, although such clauses are few and far between where an individual contractor has been engaged. Moreover, termination provisions generally favour clients over contractors.

With that said, there’s nothing to stop you approaching the client and asking to be released voluntarily from the contract. An astute contractor would frame such an approach along the lines of there being little work to do and offering to save the client money by voluntarily agreeing to early termination. This has the advantage of allowing you to leave on good terms; will protect your reputation and is more likely lead to further engagements from that particular client.

Your question implies that you’re not overly concerned with the financial aspect of having your engagement terminated, although it’s useful to consider the possible consequences.

Many contracts will stipulate a daily or hourly rate, although some engagements stipulate a fixed fee. These are more common where you’re expected to deliver an outcome for the client. If a fixed fee was agreed, however, then it’s fair to assume that the client would want part of this returned. A contractor would negotiate this based on the objective having been completed (and therefore a lower reimbursement falling due to the client), whereas the client would probably seek to negotiate this based on the amount of time spent in relation to the agreed engagement. Penalty clauses where the contractor has to pay the client more than a reimbursement for walking away early are almost never present in contracts, not least because they’re almost always unlawful.

The most crucial consideration, however, is your reputation -- refusing to carry out work against your client’s wishes is not likely to lead to further engagements and news travels fast in competitive circles. Poor feedback or references from one client to another is every contractor’s worst nightmare, as it can be immensely difficult to undo that sort of damage to your reputation. It is vital that you consider all of the relevant factors before taking any particular course of action and it may be more beneficial in the long term to forego the opportunity to rejoin your old team in order to keep your current client satisfied. Demand seldom outweighs supply for long, and it would be silly to harm your long term prospects in order to overcome boredom in the short term.

The expert was Aasim Durrani of Lawdit Solicitors, a legal advisory to contractors that specialises in intellectual property, internet law and corporate law.

Editor’s Note: Further Reading –

Contractors’ Questions: Can I keep the deposit on a cancelled contract?

A contractor’s software development agreement – the finer points

Contractors’ Questions: Is my termination clause legally-binding?

Wednesday 13th Aug 2014
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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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