Handcuff Rule - Anyone been taken to court?

[perplexed]

This is just getting more and more confused. If you don't have accurate details, then no-one can help here. Either go and get the information, and we'll be glad to give our experiences, or stop wasting our time.

As "NotAllThere" says.

In general though, any "handcuff" rule has to be fair and reasonable. Once had a client who tried to claim that my company couldn't provide services to any of their clients, their clients being direct or indirect which was quite frankly a laughable and utterly unreasonable interpretation of the contract clause by them.

[Major Hassle]

As "NotAllThere" says.

In general though, any "handcuff" rule has to be fair and reasonable. Once had a client who tried to claim that my company couldn't provide services to any of their clients, their clients being direct or indirect which was quite frankly a laughable and utterly unreasonable interpretation of the contract clause by them.

Presumably the handcuff is for the ltd company, just start another one and go direct with that...

[Lance]

Presumably the handcuff is for the ltd company, just start another one and go direct with that...

Normally a handcuff clause is used against an individual. Despite the clause being in a LTD. company contract.

Best advise is to stick to your contract and not try to rip the agencies off. They have legal teams for this sort of thing.
If you want to go direct let the client force it with the agency. Or leave and return after 6 months.

[Old Greg]

Normally a handcuff clause is used against an individual. Despite the clause being in a LTD. company contract.

How does this work in practice, if the individual has started a new company which is contracting with the client? Asking for a friend, naturally.

[northernladuk]

I don't think what Lance says is strictly true. The handcuff is against anyone in the Ltd but there is only the director so it looks like its targeting the individual. If there were more people it would cover them as well. If that makes sense.

If you shut the company, open an new one and rock up they could attempt to 'pierce the corporate veil' which would allow them to target the person regardless of the company set up. It is a very thinly veiled attempt to off load the companies obligations and allow the same person to work so they can look beyond the company to combat this.

[Lance]

I don't think what Lance says is strictly true. The handcuff is against anyone in the Ltd but there is only the director so it looks like its targeting the individual. If there were more people it would cover them as well. If that makes sense.

If you shut the company, open an new one and rock up they could attempt to 'pierce the corporate veil' which would allow them to target the person regardless of the company set up. It is a very thinly veiled attempt to off load the companies obligations and allow the same person to work so they can look beyond the company to combat this.

I was over simplifying it a bit.
In reality, an agent would look to sue (as a last resort) for losses.
A half-way house would be where a judge issues a cease and desist order against an individual. That won't get the agent any money but it does draw a stop to an individual working for that client, by any route. Whether that involves 'piercing the veil' or not I'm not sure.

IANAL

[northernladuk]

I was over simplifying it a bit.
In reality, an agent would look to sue (as a last resort) for losses.
A half-way house would be where a judge issues a cease and desist order against an individual. That won't get the agent any money but it does draw a stop to an individual working for that client, by any route. Whether that involves 'piercing the veil' or not I'm not sure.

IANAL

Ah no. They wouldn't need to do that. If it's the same company the individual would be covered as an entity of the LTD. They would only need to pierce if the person started a new company and hid behind that. They can go through the LTD and target the person if he did that. Uncommon but it's there.

[DeludedKitten]

Normally a handcuff clause is used against an individual. Despite the clause being in a LTD. company contract.

Best advise is to stick to your contract and not try to rip the agencies off. They have legal teams for this sort of thing.
If you want to go direct let the client force it with the agency. Or leave and return after 6 months.

Or don't opt out of the agency regulations and go back sooner.

Don't forget that there is likely to be an enforceable penalty clause in the contract between client and the agency as well. Not your concern, technically, but it would be something the client should think about.

[boxingbantz]

What do HMRC have to do with it?

Exactly what I thought.

[checkerman]

Thanks for all your replies.

Your right, unfortunately I don't have all the details, and yes I already agreed he needs a lawyer.


But my actual question was "I'm interested in seeing if anyone else has had this or actually gone to court ?" and "failing that is shutting down the company not an option ?

I'm just intrigued at how likely an agency will successfully win - and if they do what are the chances of them getting the money they are 'owed' ( I will report back here if it ever gets that far)

For instance they have sent a bill for a loss of earnings of 6mnths. Well his renewal is 3mnths, so if he leaves after 3, how valid is that claim ?

If a court rules in the favor of the agency - and he then decides to shut down the company - how can the money be retrieved from the individual ? I'm sure I saw a post exactly on this forum where an agency/someone was owed a lot of money, they ruled in their favor, the amount wasn't paid, went back to court, agreed payment terms were setup, nothing paid, company shutdown, and the advice on this forum was to just forget about ever getting your money.

Thanks everybody for your replies - I will report back in the future to let you know how things went.