Terminating contract with agency to go direct with client

[lodgeview]

Hi,

I got the contract 8 weeks ago with my current client via a recruitment agency. Basically the hiring manager bypassed the Company's HR department (I think they needed people quick and HR can be slow to process) and called on this particular agency to find him contractors. I received the call from the agent asking if I would be interested, terms were agreed and the contract signed. The contract states that the Conduct Regulations will not apply to this particular contract but the agent persisted in asking me to sign the separate 'Opt out' form. He even stated in writing for me to sign this and leave the date off so it could be backdated to before I was introduced to the client. The usual restrictive covenants of I cannot work for the client for 12 months after the contract is terminated are written in.

Shortly after starting the contract the hiring manager called to ask if I could bin the agency as the markup was ludicrously high. Basically the agency, who was on the client's preferred supplier list, had abused the markup that had been agreed between the client's HR department. As a consequence the contract between the client and agency was cancelled immediately by the client's HR department and they were kicked off the PSL.

However my contract between my Limited Company and agency is still in place and the client's HR department have agreed to honour the payment terms for the remainder of the 6 month contract. They have informed me that when the contract comes to an end I can then work direct with the client and no restrictive covenants will apply as the agency are longer be on the PSL.

Now, I have NOT opted out of the Conduct Regulations although the contract does say that they won't apply.

What are my options here?

As I have NOT opted out what does that mean for me? I have read Regulation 10 stating that you can leave 14 weeks after the start of the contract or 8 weeks after the contract ends (whichever is later). Does this mean that I would be free to walk away after 6 weeks (as a minimum) of working for the client, have a break of 8 weeks, and then I can go back to work direct? Alternatively could I work the 6 month contract, have the 8 week break and then go direct?

As the contract between the agency and client has been cancelled does that not have some bearing and strengthen my case in any way? Can I simply walk away now?

If I decide to stay on for the remainder of the contract could I work direct for the client without a break of 8 weeks as their HR department have advised (as they are no longer on their PSL). Would there be any negative/financial impact on me from the agency?

My contract also says that if the agency to client contract is cancelled the agency can terminate me. Now seeing as it has been cancelled does the same not apply to me i.e. can I not cancel the contract in the same manner? Surely if the agency has that right then so do I?

Any suggestions are greatly appreciated.

ATB.

[TheFaQQer]

Any suggestions are greatly appreciated.

Take professional advice. This is your livelihood we are talking about, and you want to trust it to a bunch of unqualified strangers on the Internet?

[northernladuk]

They have informed me that when the contract comes to an end I can then work direct with the client and no restrictive covenants will apply as the agency are longer be on the PSL.

I'd say this would be correct. They can only pull restrictive covenants to protect their trade. If there is no trade then there there are no losses incurred with you going direct then it's all OK. They may be a bit shirty about it but bearing in mind the client has already kicked them out for being tulip you can bet the client would be happy to back you up in arguing it.

What you've got to hope is the agency skulks away quietly. If they decided to kick up a proper tulip storm the client could, at some point, just think it's not worth it and go get another contractor and start afresh. I doubt it but it has happened.

I think you'll be fine. The agency is in enough trouble as it is without causing further trouble.

[TheFaQQer]

I think you'll be fine. The agency is in enough trouble as it is without causing further trouble.

Or alternatively, the agency has nothing to lose and everything to gain by enforcing the restriction that they have between the contractor and them, and also between the themselves and the client. Until it comes to court, then nobody knows.

IIRC, Andy Hallett wrote something fairly recently about going to court over a 12 month restriction clause (which I've read so many times on CUK that would be struck out as unreasonable).

[Andy Hallett]

Get some legal advice. However based on the above I suspect the agency would go after the client, not you.

[SueEllen]

Oh and in future NEVER leave the date of any documents even if they are draft.

The client would have an easy get out clause if you had put the date on. However now you will need to go through your email inbox to prove when you where sent the opt-out form and sent it back.