Agency Says They Have Exclusive and Sole Right To Payroll Contractors

[hitman126]

Hello,

I have recently secured a new contract. However, the agency (Hays) have informed me that
I am not allowed to use my Limited Company or an external Umbrella Company on the new
contract assignment, as they've agreed with the client to payroll all of their contractors as
PAYE.

Is this legal at all?

[LondonManc]

However, the agency (Hays) have informed me that
I am not allowed to use my Limited Company or an external Umbrella Company on the new
contract assignment, as they've agreed with the client to payroll all of their contractors as
PAYE.

Is this legal at all?

In a word, yes.

A PSC ban, which many have imposed, means that you can't use your limited company. Not using umbrellas also removes cost from the chain for both you and agency - you don't have to pay an umbrella fee and they don't have to deal with the admin of managing the money. It's also safer for you if you're paid direct from client payroll; if the agency goes bust, doesn't matter because they're not in your money chain. If the client goes bust, the agency will make sure that they get their money first and you'll be well down the pecking order.

What is more important is that you need to establish if this is a Fixed Term Contract in the true sense, which it does sound like. This is good for you if it is as you, in theory, have more rights, such as enforceable notice (See gov advice here).

Understand what you're signing up for rather than simply ranting about it.

[hitman126]

In a word, yes.

A PSC ban, which many have imposed, means that you can't use your limited company. Not using umbrellas also removes cost from the chain for both you and agency - you don't have to pay an umbrella fee and they don't have to deal with the admin of managing the money. It's also safer for you if you're paid direct from client payroll; if the agency goes bust, doesn't matter because they're not in your money chain. If the client goes bust, the agency will make sure that they get their money first and you'll be well down the pecking order.

What is more important is that you need to establish if this is a Fixed Term Contract in the true sense, which it does sound like. This is good for you if it is as you, in theory, have more rights, such as enforceable notice (See gov advice here).

Understand what you're signing up for rather than simply ranting about it.

Well, understanding what I'm signing up for is all the more reason why I'm asking the questions here, which is what this forum is all about, no?

[LondonManc]

Well, understanding what I'm signing up for is all the more reason why I'm asking the questions here, which is what this forum is all about, no?

Absolutely. There's a fantastic search function too.

NLUK provides lessons in it, it's that good.

[GhostofTarbera]

Is this legal at all?

Not the right question to ask

The right question is - Can they do this

And the answer is yes they can

It’s up to them how they want to engage a resource


Sent from my iPhone using Contractor UK Forum

[northernladuk]

Just to help me find all these threads in the future. Just because people don't like something it doesn't mean it's illegal. Companies thee size of Hays don't generally engage in illegal practices. Sometimes it's a bit hooky or even unfair but illegal?

[ladymuck]

Interesting that the engagement method didn't come up until the contract was offered. That's surely a subset of the first question you ask, not what you wait to be told?

[hitman126]

Interesting that the engagement method didn't come up until the contract was offered. That's surely a subset of the first question you ask, not what you wait to be told?

Well, that's a valid point. However, as is often the case in the IT contract market, it is quite common for one
to receive a call about a role, be interviewed and offered the job all within hours, leaving you very little time
to ask lots of pertinent questions, especially when this has been a well-trodden path you've been used to for
years.

There are many IT contractors who even struggle to find the time (or bother) to read all 20-30 odd pages of
their contract and only find out about things like the terms of their notice period, when they're well into the
contract. If the role, it's location, rate and duration are suitable and attractive, those are the factors that take
centre stage initially and all other questions come later. It is no excuse and it's certainly not great, but that's
just the reality.

So, in answer to your question, the finer details of the method of engagement were never discussed with the
agency at the time, other than the fact it would be within scope of IR35, which wasn't in itself a complete
showstopper for me. What I did however believe was that I'd be entitled to nominate an Umbrella company
of my own choice, not have one imposed on me by the agency. I vaguely recall reading on another platform
a while back that agencies weren't allowed to impose an umbrella company on you and hence my question.

[LondonManc]

So, in answer to your question, the finer details of the method of engagement were never discussed with the agency at the time, other than the fact it would be within scope of IR35, which wasn't in itself a complete showstopper for me. What I did however believe was that I'd be entitled to nominate an Umbrella company of my own choice, not have one imposed on me by the agency. I vaguely recall reading on another platform a while back that agencies weren't allowed to impose an umbrella company on you and hence my question.

It's not illegal. It's no different to clients dealing with a preferred set of agencies. If none of the umbrella companies are trustworthy and you wouldn't take the contract because you're being forced down a specific route, raise it. Odds are the role will miraculously be pulled at the last minute though.

[malvolio]

The finer details are what makes the difference between being comfortable and being unexpectedly landed with a major problem. As is reading the f***ing contract, even if you don't get it reviewed, and understanding exactly what you are being offered.

No idea what you do to earn money, but your job is "being a contractor". And that means doing the homework. It's not like there haven't been loads of threads on here and elsewhere about the new variations on hiring were being offered these days. And the problems people are getting into...