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nstansbury
28th March 2011, 23:14
Hi all,

I have been freelancing and contracting since 1998, and have just been presented with a set of terms for a new role that I've never seen before and I'd be interested your thoughts.

I have never used nor heard of this specific agency before now, they do however seem reasonably sized, and have seen a few thread here where they have been mentioned.


1. Payment terms are up to 6 weeks, monthly invoicing with a 14 day payment period.
- Having had an agency go bust on me and lose money as a result, for as long as I can remember I have always insisted on invoicing weekly with either 7 or 14 day terms.

2. The agency will withold payment to me until the client has paid the agency. If the client later disputes any invoice with the agency for any reason, they expect me to reimburse them.
- Both my current and previous contract explicitly states exactly the opposite, that payment won't be withheld for non-payment by the client, unless it is due to unsatisfactory performance by the contractor.


The agency claims all their contractors agree to these terms, but to me it rather defeats the point of having an agency involved in the first place, predominantly to insulate me from the client, be it bill chasing or any other legal nonsence.

It strikes me that this agency has managed to quite neatly pass all their client liability onto their contractors and use them for their cash flow management, whilst taking a nice little margin in perpetuity for zero risk.


If the role wasn't so interesting I would have laughed and said no straight off, so any thoughts would be much appreciated before I do, or frankly more likely don't, sign on the dotted line....


Cheers,


N

northernladuk
29th March 2011, 07:15
<makes sure MF isn't around>...

But you get a cut of the agencies money. They get payment from the client, pass on the agreed amount to you and keep the resk. It could be argued it is fair for the agent to say if I don't get paid I can't pass the cut on to you.

The actual mechanics of who owns the money and who is getting a cut has been argued but either way I wouldn't want to pay my contractor out of my pocket if the client hasn't paid up. I would argue it with the agent but can understand why he has it.

If there was a choice between agents on a contract the guys with this clause in wouldn't do well but unfortunately doesn't work like this.

Also check Opt in/opt out status. This will affect this clause I believe but I don't know it well enough to describe. Do a search of Opt as this has been discussed in some detail.

Payment terms vary widely between agents. Had one try offer me 45 days from invoice last contract and never got him below 30 days in the end. Was a bit player in a big client so accepted reluctantly but obviously was exposed to a big risk.

If you are a specialist and they are gagging for you I would push it harder but I am cetainly not in a position to turn down work at the moment so would try my luck and then sign to be honest. Work with a little managed risk is better than a bench and my prinicples intact in my personal opinion.

Some stuff about Opt in/out
http://www.contractoruk.com/agencies/opt--or-opt-out.html_0/
http://www.contractoruk.com/agencies/5159.html

Wanderer
29th March 2011, 07:42
1. Payment terms are up to 6 weeks, monthly invoicing with a 14 day payment period.

Write back to them saying "The maximum credit My LTD is willing to extend to you Agency is X days. If you cannot offer these terms or better then I will have to inform the client that I cannot accept the contract do to your payment terms".


2. The agency will withold payment to me until the client has paid the agency. If the client later disputes any invoice with the agency for any reason, they expect me to reimburse them.

Did you opt out of the agency regs then? Opting out is NOT a good thing, this forum is littered with sad stories from people who did.

If you didn't opt-out then this contract term is illegal and the need to strike it.


The agency claims all their contractors agree to these terms

Typical agent bullshit. Don't listen to this.

If it gets really heated then tell them you are going to speak to the client and tell that the agency are offering unreasonable terms and sorry but you can't take the contract because of this. This will make the agency squeal like a pig but it's the only way to negotiate with them sometimes. If the client wants to engage you then they will give the agency a rocket for you. Alternatively they may dump you altogether so it's a do or die plan and only go this route if you are willing to walk away.

TheFaQQer
29th March 2011, 08:29
1. Payment terms are up to 6 weeks, monthly invoicing with a 14 day payment period.
- Having had an agency go bust on me and lose money as a result, for as long as I can remember I have always insisted on invoicing weekly with either 7 or 14 day terms.

Doesn't strike me as too unreasonable, to be honest. The longest terms I've had were invoice monthly, paid a week after invoice, or even invoice weekly but paid on 30 day terms. If you don't like it, then negotiate.


2. The agency will withold payment to me until the client has paid the agency. If the client later disputes any invoice with the agency for any reason, they expect me to reimburse them.
- Both my current and previous contract explicitly states exactly the opposite, that payment won't be withheld for non-payment by the client, unless it is due to unsatisfactory performance by the contractor.

Not sure I like that one, but assuming that you didn't opt out in writing before meeting the client then it's a moot point anyway. They can include it, but it's not a valid clause if that's the case.

Again - negotiate and have the clause removed if you don't like it.


The agency claims all their contractors agree to these terms,

They all do. Apparently, I'm the only contractor to have ever questioned any contract that's been put before me, if I believed what the agents tell me.


It strikes me that this agency has managed to quite neatly pass all their client liability onto their contractors and use them for their cash flow management, whilst taking a nice little margin in perpetuity for zero risk.

If the clauses are valid, then that's exactly what they have done - they take no risk because they aren't going to pay without getting paid themselves.


any thoughts would be much appreciated before I do, or frankly more likely don't, sign on the dotted line....

Start with the negotiation. Check your opt out status - but don't tell them this.

Either you negotiate successfully and get the terms changed, or you fail. Then you have to decide whether you want to walk away or not - don't threaten to do it if you aren't prepared to do it.

If you do walk away, and have the contact details for whoever did the interview, email / ring / visit them - get your side of the story in first to explain that you would like to start work, but just can't because you can't agree a contract. If the client says to start and then fix the contract, tell them that you won't be insured without written paperwork - that will scare them enough to stop you working without the contract, and hopefully they might put some pressure on the agency to sort it out.

Good luck with it, though.

Ignis Fatuus
29th March 2011, 08:45
But you get a cut of the agencies money. They get payment from the client, pass on the agreed amount to you and keep the resk. It could be argued it is fair for the agent to say if I don't get paid I can't pass the cut on to you. No more than it is fair for me to say to the building society that if I don't get paid then I can't be expected to pay the mortgage.

You're not getting a cut of the agency's money: the agency is contracting with you do do some work, if you do it then you should get paid. If the agency wanted your relationship to be with the client rather than with them, they could make the contract say so. OTOH if your contractual relationship is with the agency, then the agency's business is not your business.

Sockpuppet
29th March 2011, 08:49
I've got a contract with tulip like this in and I'm opted out (oh the doom!)

Anyway my client is one of the largest retailers in the UK so I'm not worried about billy agency not getting paid. Luckily my co doens't hold much cash your honour so if they need it paying back I'll just fold it ;)

SueEllen
29th March 2011, 08:57
I've got a contract with tulip like this in and I'm opted out (oh the doom!)

Anyway my client is one of the largest retailers in the UK so I'm not worried about billy agency not getting paid. Luckily my co doens't hold much cash your honour so if they need it paying back I'll just fold it ;)

Large retail companies in the UK have a habit of trying not to pay smaller companies in their supply chain or taking a long time to pay them - so I would be careful with that.

Sockpuppet
29th March 2011, 09:16
Large retail companies in the UK have a habit of trying not to pay smaller companies in their supply chain or taking a long time to pay them - so I would be careful with that.

I'm lucky in that I also approve my invoices so always make sure mine get paid ;) Gotta love SAP and costs being charged to the project.

TykeMerc
29th March 2011, 09:54
I certainly wouldn't accept either clause, both are show stoppers for me.

I don't extend more than 14 day credit to any agency (burned in the past like you).

I've never opted out prior to introduction so clause 2 would be invalid to me, but I certainly would never even contemplate agreeing to it.

As others have said the "every other contractor we have is happy with these terms" line is utter bollocks, the only contractors who would have agreed to those are either utterly naive or wouldn't have read the contracts at all.

SueEllen
29th March 2011, 10:13
1. Payment terms are up to 6 weeks, monthly invoicing with a 14 day payment period.
- Having had an agency go bust on me and lose money as a result, for as long as I can remember I have always insisted on invoicing weekly with either 7 or 14 day terms.

I would do a quick google to find out how big the agency is and to see if they are solvent. Some agencies you never heard of are bigger than you think and vice versa. If they are large and solvent then this isn't an issue.



2. The agency will withold payment to me until the client has paid the agency.

They can f*** off with that. What's the point of them being involved if they are going to do that? If they have such cash flow problems they can't provide a factoring service then they shouldn't be in business.





If the client later disputes any invoice with the agency for any reason, they expect me to reimburse them.

They seriously need to get a lawyer to draw up their contracts.

If they are a enough large agency and trying it on then you should point out you are opted-in.

If they still won't budge with clause 2 and you still want the contract you should pay for a lawyer (do a search on this forum for recommendations) to draw up a new one. The vast majority of agencies will budge on terms when you get your own lawyer to draw up a contract.

nstansbury
29th March 2011, 10:18
I have already told the agency I found these terms unacceptable, so it is really now down to a punt. In this day and age, am I prepared to risk 6 weeks worth of invoiced work.


Did you opt out of the agency regs then? Opting out is NOT a good thing, this forum is littered with sad stories from people who did.

If you didn't opt-out then this contract term is illegal and the need to strike it.


As I understood - and was confirmed by the agency (?!), these only cover you in regards to being paid for unsigned timesheets.

However, these are the actual regulations: The Conduct of Employment Agencies and Employment Businesses Regulations 2003 (http://www.legislation.gov.uk/uksi/2003/3319/contents/made)

Where they say here: http://www.legislation.gov.uk/uksi/2003/3319/regulation/12/made


Prohibition on employment businesses withholding payment to work-seekers on certain grounds
12. An employment business shall not, in respect of a work-seeker whom it supplies to a hirer, withhold or threaten to withhold from the work-seeker (whether by means of the inclusion of a term in a contract with the work-seeker or otherwise) the whole or any part of any payment in respect of any work done by the work-seeker on any of the following grounds—

(a)non-receipt of payment from the hirer in respect of the supply of any service provided by the employment business to the hirer;

(b)the work-seeker’s failure to produce documentary evidence authenticated by the hirer of the fact that the work-seeker has worked during a particular period of time, provided that this provision shall not prevent the employment business from satisfying itself by other means that the work-seeker worked for the particular period in question;

(c)the work-seeker not having worked during any period other than that to which the payment relates; or

(d)any matter within the control of the employment business.


So very interesting, Opting out does appear to allow them to place this clause in contracts.



No more than it is fair for me to say to the building society that if I don't get paid then I can't be expected to pay the mortgage.

You're not getting a cut of the agency's money: the agency is contracting with you do do some work, if you do it then you should get paid. If the agency wanted your relationship to be with the client rather than with them, they could make the contract say so. OTOH if your contractual relationship is with the agency, then the agency's business is not your business.

I totally agree - this would be my position entirely, I am not contracted to the client I am contracted to the agency, yet I have my pants down to all their 3rd party risk. I like your analogy too ;-)


Work with a little managed risk is better than a bench and my prinicples intact in my personal opinion.

I think that's wise advice - principles only go so far, except as AFACT I can't quantify the risk, nor manage it!

Thank you all for your thoughts, I think it's time for coffee and decisions...


Cheers,

N

Wanderer
29th March 2011, 19:09
So very interesting, Opting out does appear to allow them to place this clause in contracts.

Yep, if you opt out then they can put whatever they like in the contract as it's business to business, though completely outlandish terms could potentially be challenged in court and set aside.

Moral of the story, don't opt out! There are no IR35 implications and as you can see there are very good business reasons not to opt out.

Sockpuppet
29th March 2011, 20:15
Maybe I'm opted in who knows.

I always thought opting out after introduction only lasted until the contract was renewed?