• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Restrictive covenant in contract and tricky situation

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Restrictive covenant in contract and tricky situation

    Hi All

    Found myself in tricky situation through no fault of anyone's really:-

    Been working for client A (large multinational) since May through client B (reasonable sized consultancy). Work has been going well, both clients pleased with the progress. Contract came to an end recently but there is more work there and both clients have said they will be getting me back in. Client A's hiring manager however has recently been told that the business are going to be getting all contractors from a different consultancy company (call them client C) going forward as it will streamline resourcing. Client C have approached me to try and sign a contract with them but client B know about this now and are not happy as they introduced me to client A and have been taking their cut. Client B have warned me about the restrictive covenant in my contract and left the ball in my court.

    So, I really like working through client B, good people and have a very good relationship with client A. I don't want to end up going back to client A through client C as I think it just puts me, my business and client B in a really difficult situation and will ruin the good relationship built up. Client C are telling me that restrictive covenants are nothing to worry about but they would say that. There is still a chance that client A's hiring manager may be able to make an exception and get me back through client B although this may be a long shot and puts him at odds with his own organisation. My plan at the moment is to go back to client C and tell them of the predicament I would be put into and that I don't want to go down that road........ yet.

    Anyone get any experience of situations like this with restrictive covenants?

    #2
    Generally, if the end client want you, it's up to them to tell any agencies in the chain to go away. The agency causing the fuss isn't losing any earnings because your contract ended. The new one coming up has been assigned by the client to a new agency so they can't prove a loss when the contract to provide resources was taken away from them. If they still have a service agreement in place with the end client to provide resources then they could claim a loss.

    Ultimately, I'd tell the end client (not the agencies you're graciously calling clients) the situation and ask for help in resolving. They are the fee payers at the end of the day.

    Comment


      #3
      If client B cannot demonstrate a loss due to you going through client C then the handcuff won't stand. They can't just block you working because they've had their nose put out of joint.

      If B was still in the frame and by switching to C they will be losing the revenue from you then they have a pretty solid case. If the client will not be doing any further business with B then there is no claim for loss.

      Sounds like you are in the clear so let B moan a bit. Its for client A to sort out. They may fold and pay B a finders fee depending on what is in their upper contract but that's not your problem.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Originally posted by northernladuk View Post
        If client B cannot demonstrate a loss due to you going through client C then the handcuff won't stand. They can't just block you working because they've had their nose put out of joint.

        If B was still in the frame and by switching to C they will be losing the revenue from you then they have a pretty solid case. If the client will not be doing any further business with B then there is no claim for loss.

        Sounds like you are in the clear so let B moan a bit. Its for client A to sort out. They may fold and pay B a finders fee depending on what is in their upper contract but that's not your problem.
        Trouble is, Client B will continue to be doing work for big client A and have been doing work for them for many years. If I went back under client C, I would probably end up sitting with Client B staff. Most uncomfortable. They may even decide that they can demonstrate a loss because I am only there because of them. Its just one of those tough business decisions to make. I have a call with client C later today so will see what they say.

        Comment


          #5
          Originally posted by Gomez View Post
          Trouble is, Client B will continue to be doing work for big client A and have been doing work for them for many years. If I went back under client C, I would probably end up sitting with Client B staff. Most uncomfortable. They may even decide that they can demonstrate a loss because I am only there because of them. Its just one of those tough business decisions to make. I have a call with client C later today so will see what they say.
          But if Client A is saying they are moving everyone to Client C, then there aren't likely to be any Client B people there for long.

          So if you got it straight, and gave it to us straight, that Client A is dumping Client B, then from a strict legal perspective they probably have nothing on you.

          From a business perspective, businesses make payments to people all the time to make problems go away. So maybe it is time to tell Client B:
          A) Client A is moving all the resourcing to Client C, so that would mean they haven't been harmed because the contract isn't going to be theirs going forward anyway.
          B) But you do accept that even if there isn't harm to them, there's been value to you in being introduced to A.
          C) You value your relationship with them and would hope to work with them again.
          D) They aren't going to be providing any services to YourCo in regard to this contract, going forward.
          E) In light of all that, what would they think would be fair compensation to resolve the whole matter and part on friendly terms?

          It can't really be very much. £1K maybe. If they say much more than that, tell them you can't justify that much. What are they going to do? Not much.

          As a side note, payments like this are made by employers, not employees. If Client A wanted to make you a permie, they would be the ones paying off the agency, not you. So making this payment would be a pointer towards self-employment, which could only help if you are in a borderline IR35 situation.

          Comment


            #6
            Result?

            Remember to let us know the outcome......

            Comment


              #7
              Originally posted by northernladuk View Post
              If client B cannot demonstrate a loss due to you going through client C then the handcuff won't stand. They can't just block you working because they've had their nose put out of joint.

              If B was still in the frame and by switching to C they will be losing the revenue from you then they have a pretty solid case. If the client will not be doing any further business with B then there is no claim for loss.

              Sounds like you are in the clear so let B moan a bit. Its for client A to sort out. They may fold and pay B a finders fee depending on what is in their upper contract but that's not your problem.
              Agreed.

              And sometimes Client B will get the lawyers in. Client A or Client C will get scarred and run away.

              Comment


                #8
                Originally posted by SeekingIT View Post
                Remember to let us know the outcome......
                The situation finally got sorted out. I've managed to sign a new contract with the original client B so no problems.

                Comment

                Working...
                X