Is there any legal limit on how big a cut an agency can take

[cojak]

I was happy with the rate at the time, under the understanding that I was being charged out at a lower rate, basically I had been out of the industry for a while, and this was a way back in, and the client were taking a chance on me because I had been out of the game for a while and were being charged a lower rate because of that. As it turns out I was being charged out at a full rate and they were taking a 70% of it.

When I found out I wasn't too bothered as it was a way back into the industry, but as I am still chasing the agency for payment on invoices that are over 6 months old I was just curious if I had any legal stick to threaten them with.

Of course you do, just not that!

Google 'dunning' and 'agency late payment' for this site (instructions in the Welcome forum) and get your money back that way.

[BlasterBates]

The fact they haven't paid is as big as a stick as you need. Just send a reminder and follow up with a reminder threatning legal action and then take legal action.

One thing to bear in mind is that contractors do not compete on price. Once a PM has a budget for a contractor he'll take the best man he can for the money. The going in cheap won't work, because the PM will get approval and the rate is determined by the purchasing dept. There is no incentive for a PM to take on a cheaper bod. You can be overpriced ie. it can be the purchasing dept has given the PM a rate which you are above but once you are below the threshold it then makes no difference.

Price is a "sufficing" criterium not a competitive "criterium" i.e. once you're below the "limit" it makes no difference. It's a big incentive though for the agent...an agent will push a cheap bod far more aggressively. So if you want to get your foot in the door again, yes inevitably it's the agent that will get the dough. So this higher than usual margin was bound to happen.

[TestMangler]

I was happy with the rate at the time, under the understanding that I was being charged out at a lower rate, basically I had been out of the industry for a while, and this was a way back in, and the client were taking a chance on me and were being charged a lower rate because of that. As it turns out I was being charged out at a full rate and they were taking a 70% of it.

When I found out I wasn't too bothered as it was a way back into the industry, but as I am still chasing the agency for payment on invoices that are over 6 months old I was just curious if I had any legal stick to threaten them with.

<'points of view' mode on>

Why, oh why, oh why, oh why would ANY contractor allow this to happen ???

I can almost imagine someone in a desperate financial position and needing a job falling for the 'client taking a chance on you', 'lower rate because out of the industry' thing, but to allow them to do that and then NOT PAY you beggars belief. The very first time a payment doesn't get made, you take action.

Get a grip and sort it out.

1. Demand payment of your outstanding invoices now. (Search the forum for how to).
2. At next renewal, demand a 25% increase to come out of their margin.

Always remember, any negotiating stance is only as good as your ability to stand behind it. If they don't deliver, you walk. Otherwise, accept the fact that you're getting butt-****ed, and take it like a man. If you let them do it, they will !

[Ben81]

The fact they haven't paid is as big as a stick as you need. Just send a reminder and follow up with a reminder threatning legal action and then take legal action.

Next step is the solicitors, but I was just curious if there was another legal issue that may encourage them to sort it out before solicitors got involved, which I don't want to do, so the threat of added legal issues might spur them into acting.

Anyway thanks all for the advice.

[Ben81]

<'points of view' mode on>

Why, oh why, oh why, oh why would ANY contractor allow this to happen ???

I can almost imagine someone in a desperate financial position and needing a job falling for the 'client taking a chance on you', 'lower rate because out of the industry' thing, but to allow them to do that and then NOT PAY you beggars belief. The very first time a payment doesn't get made, you take action.

Get a grip and sort it out.

1. Demand payment of your outstanding invoices now. (Search the forum for how to).
2. At next renewal, demand a 25% increase to come out of their margin.

Always remember, any negotiating stance is only as good as your ability to stand behind it. If they don't deliver, you walk. Otherwise, accept the fact that you're getting butt-****ed, and take it like a man. If you let them do it, they will !

Great advice, and it will be taken in the future, unfortunately I have been too soft with this agency, and I'm not taking their BS anymore.

[SueEllen]

Next step is the solicitors, but I was just curious if there was another legal issue that may encourage them to sort it out before solicitors got involved, which I don't want to do, so the threat of added legal issues might spur them into acting.

Anyway thanks all for the advice.

Solicitors aren't more likely to get you your money then you can yourself.

Cojak and the others have given you clues about how you should go about chasing.

[JamJarST]

But when you agreed the rate presumably you were happy. The fact that that they take a huge cut shouldn't affect your "happiness". Whether they earn a lot or less won't make any difference to your financial well being. Lets say you complain and the client then forces the agent to take a huge cut; the agency will earn less but this will make no difference to you. If you were to go through another agency there is a very good chance that he would just simply add 20% or 30% to your rate, to get in with the client ("hey we've got a cheap contractor") so you wouldn't necessarily be any better off.

Lets say for example that an agency is taking 10%, how do you know the client isn't ripping you off by "pocketing" say 20% of what they might have been prepared to pay.

I would have absolutely no problem at all working through an agency who took 50%, because I know that I'm getting the rate I asked for.

I would be uncomfortable with a cut like that purely because the end client is expecting a £1000 a day consultant but getting a £500 a day one.

[Ben81]

I would be uncomfortable with a cut like that purely because the end client is expecting a £1000 a day consultant but getting a £500 a day one.

By the time I found out how much the client were paying for me, I had already been there for a few months and they were more than happy with the work I was doing, but at the start if I had known how much I was costing them, I would have felt even more stupid asking so many dumb questions.

[BlasterBates]

I would be uncomfortable with a cut like that purely because the end client is expecting a £1000 a day consultant but getting a £500 a day one.

The mistake is really to go in cheap, i.e. the PM has his budget he's going to take the best man and the agency know that.

To be honest if the Agent had said to the client that the contractor didn't think he was really up to it but he'd be prepared to give it a go for half price he'd probably not even have interviewed. Generally, the last thing a PM wants is a "half-speed" contractor.

[northernladuk]

No but it ought to be illegal for people that allow an agent to take keep 50% of the money and also allow agents to withhold payments more than 2 months after they are due to be contractors.