Restrictive covenants through consultancies

[Angrybunny]

I started work as a contractor the back end of last year. Working for a bank via a consultancy (Consultancy A). The project had already been going on a couple of years, prior to my arrival.

The client has now told me they will not be renewing the statement of works with the consultancy A (because their other guys are incompetent, which they are).
They have told me they want me to stay on and work via consultancy B.
Consultancy B have approached and asked if I'm interested and what my day rate is.

I know what consultancy A charges the client and it's £300 more than my day rate.
So I'm tempted to ask for my date rate + 150. However I worry I might get 'found out'. Should I feel guilty for that?


I also have a restrictive covenants section in my contract, with to me seems quite unspecific.
saying I cannot supply my services to the client, associate, holding or subsidiary company for 12 months.

I work for a large bank and this is very restrictive as they are the number 1 customer of the product I develop in.

I will get legal advice, was just curious to other peoples' experiences, as I'm still a 'new' contractor, this being my first.

[northernladuk]

Check the welcome section out. There is a sticky about how to search the forums using google. Use that to search for handcuff or similar terms. Many of the threads found will answer your question and cover other interesting aspects of these clauses.

I know what consultancy A charges the client and it's £300 more than my day rate.
So I'm tempted to ask for my date rate + 150. However I worry I might get 'found out'. Should I feel guilty for that?

Consultancies are different to agents. Agents take a percentage cut of the rate. Consultancies charge the client £x per day. They all have what appears to be massive profit margins. I believe the Accenture business guys get charged out at around £1200 a day and up depending on how senior. There isn't a chance in hell they are going take a £150 hit on you. That is their profit margin and in many cases unless there is a certain profit margin they won't touch it. If you are super valuable you can strong arm them in to percentages akin to agents but it won't be easy. Consultancies have other staff on board that are not being charged to the clients like account/sales managers and they are supposed to be providing a service not just bodies on seats. They also have to pay their staff bench time in between gigs etc all of which is supposed to justify the charges but we could argue that one until the cows come home.

If you are happy with your rate, stick in a couple of tens of pounds a day but understand their cost model before getting upset at the rate you get. I assume you are happy with it else you wouldn't have signed the contract.

[Angrybunny]

Thanks for the feedback, I did find lot already on the forum but not so much for people working for consultancies who have swapped to other consultancies. Will give the google search a try tomorrow.

Yes I'm happy with my rate and I hadn't really considered all the costs of the consultancy. I'll probably just ask for £50 quid extra. I think that's fair as that will be the upper boundary I was quoted when I applied for the role.

[northernladuk]

Thanks for the feedback, I did find lot already on the forum but not so much for people working for consultancies who have swapped to other consultancies. Will give the google search a try tomorrow.

Yes I'm happy with my rate and I hadn't really considered all the costs of the consultancy. I'll probably just ask for £50 quid extra. I think that's fair as that will be the upper boundary I was quoted when I applied for the role.

Erm, you don't ask. What do you think they will say if you ask? You have to tell them what you want and be firm with it. If they get an idea you are just casually asking they will just casually say no and you have wasted everyone's time and possibly earned a reputation. Tell them what you want and why you think you have earned the extra amount and justify it to them. It's a business negotiation.

You could use the same search method mentioned above. Quite a few threads including one running at the moment about how/when to negotiate rate rises.

[Wanderer]

I know what consultancy A charges the client and it's £300 more than my day rate.
So I'm tempted to ask for my date rate + 150. However I worry I might get 'found out'. Should I feel guilty for that?

Hell, yes. Go right ahead and do that! Should you feel guilty? NO! Do you think the consultancy felt guilty taking £300 for every day you worked when they were doing bugger all to earn that money?

I also have a restrictive covenants section in my contract, with to me seems quite unspecific.
saying I cannot supply my services to the client, associate, holding or subsidiary company for 12 months.

That's quite common and it's to protect their business interests. Except that he client is no longer using that consultancy so there are no business interests to protect. In your situation, I would try it on and see what happens. If they do take action then it's quite likely that they will have to take action against your LTD company (presuming you are a LTD company contractor) and you could then just cease trading with that company and start a new one. Another possibility is to insist that consultancy B indemnify you against any action taken by consultancy A.

I work for a large bank and this is very restrictive as they are the number 1 customer of the product I develop in.

Lots of people here would argue that this is an unfair restraint of trade. It would be up to the courts to decide this though.

For an extra £150/day, I'd take the risk...

[Angrybunny]

I've offered my services at the old day rate + 150.

If they don't like it fine, I'll get another contract. Live life with no regrets !!

[northernladuk]

I've offered my services at the old day rate + 150.

If they don't like it fine, I'll get another contract. Live life with no regrets !!

Does your rate +150 put it above market rate? I can't believe you were happy with a gig at £150 below market rate. The new guys aren't going to pay £150 above market rate either. And you would walk from a gig that you were happy with because you won't accept £150 above market rate? My money says you wouldn't but I suspect they will come back with a counter offer that you can't refuse.

[ASB]

In terms of the covenant it is unlikely to be enforced. But its not impossible.

The lack on a ongoing relationship doesn't prevent it being enforced. Neithef does the fact they cannot show financial loss.

however it iz up to them to start action. And the only way to resolve it is by negotiation or court.

There may also be a no poaching clause in the contract with the client. I would be surprised if there isnt. This is more likely to hold up if it come to it.

[Wanderer]

The lack on a ongoing relationship doesn't prevent it being enforced. Neithef does the fact they cannot show financial loss.

Uh, what can they sue for if there is no loss?

[ASB]

Uh, what can they sue for if there is no loss?

The restraint is to protect the restrainers property. That has quite a wide definition in law. Goodwill for one. Future opportunity could be prejudiced. Those are arguable reasons for the restraint. A direct evidential loss is obviously easier to show.