Contractors' Questions: How to keep my current client?

Contractor's Question: I have been with a recruitment agency for about a year, and the client has asked all agencies to sign a supplier agreement. My agency decided not to for some reason, perhaps related to the prospect of a reduced margin. Consequently, my contract is not extended and, despite the client wanting me to stay, I cannot return for 12 months due to the restriction clause. The agency refuses to waive this clause, claiming that it will damage future business with the client even though the agency won't get any business until they sign the agreement. Is there likely to be anything that I can do to return to working for the company and keep them as a client?  

Expert's Answer: I assume that your contract was for a specific term and that this is now about to expire, and the agency has informed you that they will not be extending your contract.

The specific advice you need will depend on the precise wording of the contract you have with the agency. Nevertheless, the general position is that the agency would be able to enforce the restriction clauses in your contract if they can prove that the clauses were reasonable ones to include in the contract. For agency-contractor contracts, such restrictions are usual and, as long as they are not for an excessive period or otherwise excessively restrictive, they will be enforceable.

Bearing this in mind, you should start by looking at the wording of the contract to see exactly what it forbids you to do. I suspect it is phrased in such a way that you cannot work through an umbrella company but this will depend on the wording. Another thing you should look for is whether the agency have breached the contract - this can sometimes nullify restriction clauses but contracts are generally worded to avoid this possibility.

Many contracts contain clauses that say you can work for the client directly although, in such a case, a fee must be paid to the agency. If this is the case, the agency might be willing to negotiate over the fee, and you might be able to negotiate something with the client to see whether they would agree to pay the fee or somehow split it with you.

The expert was Gary Cousins, solicitor and co-founder of Cousins Business Law.

Wednesday 29th Sep 2010