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Contractual clauses :- non-solicitation

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    Contractual clauses :- non-solicitation

    Hi,

    Do excuse me if I've miss posted here but this seems the best place for my question and also I ask for forgiveness that my post is a little hard to read - but I do not want to give names here.

    I work through an umbrella arrangement and I've recently finished a contract for with company (a) through Agency (b). That particular client (a) has outsourced it's services to company (c) allowing my contract with company (a) to complete on time - all good with no problems so far

    I have now been asked by company (c) to do some additional work for them direct via my own arrangements and not using Agency (b) as it is their practise to work direct. I have been asked to do a piece of project work on a totally separate site with absolutely no involvement whatsoever with company (a) or any services that company (b) provide company (a).

    Now Agency (b) has heard I have been asked to do some additional work and is obviously feeling a little "butt" hurt that it no longer has a contractor presence at company (a) and has advised me that should I do any work direct to company (c) that it will sue my umbrella quoting this clause:-

    "As stated in the Agreement, Clause xx(x), xxxxx require a transfer fee of 25% of remuneration in order to satisfy and release our Supplier/Representative from our non-solicitation clause;"

    The particular clause states :-

    "you shall procure that the Representative shall not during the Assignment Period or thereafter for a period of 12 months with the relevant Client either directly or indirectly (whether under a contract of services or contract of services of through any third party) provide any services to the Client in any capacity except by contract through us unless you shall have first paid to us a fee of 25% of the total remuneration including the value of benefits attributed by HM Revenue & Customs agreed to be paid or provided by the Client for the relevant period of provision of such services (but not exceeding 12 months) plus VAT"

    For information purposes the "Client" in this case is contractually named as company (a) and the contract has no mention whatsoever of company (c) as the contract was instigated prior to any outsourcing and whilst those negotiations took place to secure such an arrangement between the two companies, there was indeed renewals and contracts signed between Agency (b) and my umbrella - and I have had no communication of a contract change.

    So where do I and in particular the umbrella stand? And would it make any difference should I do this additional work (it's not much; a month at most) using an different umbrella?

    My first reaction to this was that I was furious and penned an email with words containing "scaremongering", "harassment" and "none of your concern"; they were demanding names of contacts at company (c) and using language such as "prevent potential penalties" to you and your umbrella. Needless to say, I didn't send it but chose to pursue the details of any fees involved. I'd not mind if I or company (b) were being underhanded in any way but it's a totally unrelated piece of work for themselves and another of their clients and nothing to do with company (a).

    Thanks in advance for any assistance with this and sorry its a little long winded!

    B/Ice

    #2
    I don't know if non-solicitation comes under the same rules for handcuff clauses but the bottom line with handcuffs is they are not enforceable unless the agency can prove some form of loss. For example, if the role you get direct is also being advertised by the agent then the agent can prove he will lose revenue by going direct and any clauses will stand. If the role you go for is not and will never be represented by the agency then they don't have a leg to stand on. They cannot block you doing work if there absolutely no loss to them i.e. they are just being arses about it.

    Reading some articles from google it appears that some solicitation clauses have been enforceable for 12 months, handcuffs don't normally stand up for more than 6 due to some human right to work so they could be different animals. The thing that does stand out in the articles is the clause has to be specific to have any chance of standing up. A one line cover all will not work. i.e. can't work for client x for 12 months when client x has multiple sites and lines of business.

    Another thing is these things very rarely go to court. Clients can often bend the arms of agents in return for further business. No agent wanting business from a client is going to take his choice contractor to court unless there is a mass of them providing significant loss to the agent.

    Loads of articles to read with case law discussed so would be a very good idea to read them all and see if any fit your example exactly and see what the outcome is. Here are some links for further reading....

    Extra cause for contractors to take care with restrictive covenants :: Contractor UK

    https://www.google.co.uk/webhp?sourc...se+contractors

    52 odd threads about it on CUK as well which can be found here...

    https://www.google.co.uk/webhp?sourc...ntractoruk.com

    One thing I wouldn't do is go off the deep end as you suggested you might. That's not going to help anyone. Best way out of this is to be professional, point out case law and failing that negotiate.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Hi,

      I will take time out and read those links - but I wanted to say a thank-you for your reply. As you advise, going off the deep end isn't something I would have done. Sure, it was my initial reaction, but as you say, maintaining professionalism is crucial - ranting never helped any one.

      The particular role I would be doing is quite niche and isn't something they had planned to advertise that I'm aware of and as I previously said, they're not into the business of using Agencies preferring to deal direct with contractors on an ad-hoc basis. So there is no loss to the Agency whatsoever that I can honestly see.

      It certainly seems sour grapes which is surprising given the short length of the engagement; the original client involved and the agency and the amount of profit they have made from placing me there.

      Thanks again,

      B/Ice

      Comment


        #4
        We have had plenty of handcuff questions on here where the agency is sticking to the wording but there isn't a hope in hell of it standing up. I really don't know what they would gain by doing this. They won't lose anything, contractor can't get a gig, client doesn't get his resource and everyone loses out. Just dumb.

        Just be aware I am talking about handcuff clauses, not non-solicitation. It's late and I haven't read up on it properly so just make sure if they are different or not. I thought non-solicitation was between client and agent and a handcuff was between agent and contractor but I am normally wrong about most stuff I post about so hopefully someone will come clarify.

        EDIT : Found this post which uses both terms so it could be they are the same thing.
        http://forums.contractoruk.com/busin...ff-clause.html

        The problem you have though is that these things never go legal but the agent can cause a hell of a lot of damage by pointing it out. Clients do not want to get in to legal situations and will often roll over at the mere mention of legal proceedings. They would rather just drop the contractor than stick their neck out so even though it might be completely un-enforceable the client still may walk away from you because it's just too much risk/hassle for them.

        Another thing to look at is your Opt In/Opt out status. This can make a big difference to handcuffs, not so sure about non-solicitation. You will see Opt In/Out is mentioned in the thread I linked above. There is a very detailed sticky on what Opt in/out is linked below..
        http://forums.contractoruk.com/busin...-2003-act.html

        Am sure one of our more knowledgeable types will condense all this bollocks in to one paragraph. Malvolio and TheFaqqer know a lot about this stuff as many others do.
        'CUK forum personality of 2011 - Winner - Yes really!!!!

        Comment


          #5
          Originally posted by northernladuk View Post
          The problem you have though is that these things never go legal but the agent can cause a hell of a lot of damage by pointing it out. Clients do not want to get in to legal situations and will often roll over at the mere mention of legal proceedings. They would rather just drop the contractor than stick their neck out so even though it might be completely un-enforceable the client still may walk away from you because it's just too much risk/hassle for them.
          In this case it sounds like the client (c) has never had a contract with the agency, so unlikely to be overly concerned. It would only be if (a) got arsey with (c) that it would kick off.

          Similarly, as the clause only mentions the client, difficult to see how they can argue that working direct for (c) breaches it. My contract has a bit that specifies I can't work for "any third party introduced to the Contractor or Personnel by the Client" which would cover (c) - if yours hasn't, then (c) ain't covered.

          Do you have PCG membership? You could try their legal helpline.

          Comment


            #6
            Originally posted by mudskipper View Post
            In this case it sounds like the client (c) has never had a contract with the agency, so unlikely to be overly concerned. It would only be if (a) got arsey with (c) that it would kick off.

            Similarly, as the clause only mentions the client, difficult to see how they can argue that working direct for (c) breaches it. My contract has a bit that specifies I can't work for "any third party introduced to the Contractor or Personnel by the Client" which would cover (c) - if yours hasn't, then (c) ain't covered.

            Do you have PCG membership? You could try their legal helpline.
            This. From what the OP has shown of the contract, I'd be inclined to email back saying that (c) is not covered by your contract, so do one.

            Comment


              #7
              There is no restriction that I can see which prevents you from working with clients of the clients who are restrained - nothing in the quoted clause prevents you from working with (c).

              Even if there were, there is nothing that prevents you from resigning from the umbrella and working with a new one (apart from potentially limiting your ability to claim expenses related to a temporary workplace.
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              Comment


                #8
                Hi,

                This is great feedback - thanks for the replies.

                I have been involved in conversations with company (c) who are in total agreement with my view that the clause doesn't affect me because I'm not working directly or indirectly for company (a) but will be working for company (c) and having no involvement in company (a) at all.

                I'm just waiting on the umbrella to comment and then I can do as GillsMan says, email and tell them to do one (lol) - well, OK I won't go that far as its never good to burn bridges.

                Thanks again.

                B/Ice

                Comment


                  #9
                  Originally posted by BlackIce View Post
                  Hi,

                  This is great feedback - thanks for the replies.

                  I have been involved in conversations with company (c) who are in total agreement with my view that the clause doesn't affect me because I'm not working directly or indirectly for company (a) but will be working for company (c) and having no involvement in company (a) at all.

                  I'm just waiting on the umbrella to comment and then I can do as GillsMan says, email and tell them to do one (lol) - well, OK I won't go that far as its never good to burn bridges.

                  Thanks again.

                  B/Ice
                  It looks ok to me, usually these clause say "the client and any client of theirs that you work for..."

                  Comment


                    #10
                    Have another umbrella lined up in case your current one doesn't want to play.
                    The material prosperity of a nation is not an abiding possession; the deeds of its people are.

                    George Frederic Watts

                    http://en.wikipedia.org/wiki/Postman's_Park

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