Agency requires a contract of employment from a Ltd director Agency requires a contract of employment from a Ltd director
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  1. #1

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    Default Agency requires a contract of employment from a Ltd director

    Hi,

    I operate a small Ltd company offering specialist IT support services as a company director. There is no employment contract in place.

    After many discussions with the "agency" and its client, I received one of those corporate style 30 page plus contracts where some clauses are rather toxic:

    One example:

    ...enter into a contract with the Consultant such that he or she is under obligations which reflect the provisions of clauses 2, 4, 5, 6, 7, 8, 9 and 10 as if the Consultant were a party to this Agreement in place of the Supplier and...

    This is later followed by a lovely (ex)termination clause whereby the agency or its client can kick me out any time for almost anything.

    he Supplier (i.e. his limited company) has to enter into a contract with the Consultant (i.e. him) and that clauses 2,4,5,6,7,8,9 and 10 need to be flowed down.

    Their response to me stating that I don't believe that I need a contract being the director of said company is:

    "He should have some kind of employment contract with his limited company as he’s employed by them so by signing this contract, he warrants that he’ll abide to these clauses as the Consultant."

    As I have seen a few of those contracts over last year, I would love to know what is the general opinion on this subject?

    Should we employ ourselves or is this just unnecessary one-sided bullying from the agency /client?

    I would really hate to lose this client but I am also not keen employing myself for obvious reasons

    Thanks!

  2. #2

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    Quote Originally Posted by apj View Post
    Hi,

    I operate a small Ltd company offering specialist IT support services as a company director. There is no employment contract in place.

    After many discussions with the "agency" and its client, I received one of those corporate style 30 page plus contracts where some clauses are rather toxic:

    One example:

    ...enter into a contract with the Consultant such that he or she is under obligations which reflect the provisions of clauses 2, 4, 5, 6, 7, 8, 9 and 10 as if the Consultant were a party to this Agreement in place of the Supplier and...

    This is later followed by a lovely (ex)termination clause whereby the agency or its client can kick me out any time for almost anything.

    he Supplier (i.e. his limited company) has to enter into a contract with the Consultant (i.e. him) and that clauses 2,4,5,6,7,8,9 and 10 need to be flowed down.

    Their response to me stating that I don't believe that I need a contract being the director of said company is:

    "He should have some kind of employment contract with his limited company as he’s employed by them so by signing this contract, he warrants that he’ll abide to these clauses as the Consultant."

    As I have seen a few of those contracts over last year, I would love to know what is the general opinion on this subject?

    Should we employ ourselves or is this just unnecessary one-sided bullying from the agency /client?

    I would really hate to lose this client but I am also not keen employing myself for obvious reasons

    Thanks!
    what obvious reasons?

    I think the agent doesn't understand what being a director means though. You are bound by the contract terms whether employed by your LTD or not.
    And if you're really bothered, just employ yourself, and then resign once you've stared the gig.

    And get the contract reviewed.
    Last edited by Lance; 20th November 2020 at 15:48.
    See You Next Tuesday

  3. #3

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    Quote Originally Posted by Lance View Post
    what obvious reasons?

    I think the agent doesn't understand what being a director means though. You are bound by the contract terms whether employed by your LTD or not.
    And if you're really bothered, just employ yourself, and then resign once you've stared the gig.

    And get the contract reviewed.
    Thanks for your response. Unfortunately, the employ and resign option won't cut it as the agency has regular as well as on-demand audit and review clauses in the contract that would quickly catch this, resulting in the termination clause being activated.
    Those rather one-sided "protection" clauses make it look like a lightweight Gulag. Sadly this is like the fifth agency that started using such contracts that I have encountered this year.

  4. #4

    Fingers like lightning


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    Quote Originally Posted by apj View Post
    Thanks for your response. Unfortunately, the employ and resign option won't cut it as the agency has regular as well as on-demand audit and review clauses in the contract that would quickly catch this, resulting in the termination clause being activated.
    Those rather one-sided "protection" clauses make it look like a lightweight Gulag. Sadly this is like the fifth agency that started using such contracts that I have encountered this year.
    As said above, you need to get the contract reviewed. One time when I had a full contract review carried out (as opposed to just an IR35 review), my lawyer advised to remove the on demand audit clause as it was unreasonable - the agency wanted to be able to inspect my business records at my premises for example. It was struck out of the contract I signed.

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