When good IT contracts go bad

It's quite common for the boiler plate contracts provided by recruitment agencies to have no termination clause or notice period for the benefit of the contractor. Once tied into a contract, you are expected to see out the full term on pain of legal action.

But what happens when you can't fulfil the agreement? What does a contractor do when, for one reason or another, they feel unable to continue?

Thankfully for recruitment agents, clients and probably the long-term success of IT contracting, the situation is relatively rare.

John Kell, policy officer for the Professional Contractors Group (PCG), says the organisation has, in the past, helped contractors wishing to end a contract early; though walking out on a contract is an uncommon event.

Adrian Marlowe, managing director of Lawspeed, a recruitment law specialist, says his firm has not advised on a case for some while.

Judging by the evidence, it seems the IT contractor is a peculiarly reliable and honourable breed.

In fact, so honourable are they that when asked about walking out on a deal, contractors invariably assume the question is about not-renewing rather than downing tools.

Jane Marple, contract test manager, says, "On the odd occasion when I've had enough, I've negotiated an end date with my client to ensure good relationships remain and the project is not put in the lurch. This end date has always coincided with a contract end date."

And Bryan Pickard, SAS business analyst, says, "I have walked out. Once, but within the terms of the contract, and I gave the necessary minimum notice."

Even when the fan has been hit, contractors retain an honour and professionalism that is quite possibly unsurpassed, even to the point of self-harm.

Robert Dorney's agent went bankrupt. He was owed more than three months' pay and yet elected to continue to work for the client for a further three weeks until the end of the project. For nothing.

Dorney has been a contractor for nearly twenty years – for some big name clients, banks and insurance firms – and while he smarts from the losses in that one instance, he prides himself that he has never walked out on a client.

"It's something you just don't do," he says. "I've never seen a contractor leave mid-term; it's not in the psyche."

Lawspeed advises that withholding payment is a fundamental breach of contract. In most instances a contractor is entirely within his/her rights to stop work until payment is made.

If a contractor has opted in to the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (EAA), it is even illegal for an agency to withhold payment using one of the more familiar excuses such as: the client has not paid, or the timesheet has not been signed off.

But Adrian Marlowe warns that where a contractor opts out of EAA, the wording of the contract is binding, and further, he adds that, "once committed, they should adhere to it, or they will be in breach."

"Others [other contractors] are being rejected on the basis of a commitment by the contractor," says Marlowe. It is the commitment to the work that the client purchases and the agent sells, he explains.

So even when relationships fail, working conditions become unbearable, or circumstances change to the point that a contractor fights an overwhelming desire to get out, Marlowe advises they negotiate a "helpful" end to the contract.

"Give your reasons, speak to the agency, get some sympathy," he says. "It may be wise to give some sort of notice, or find a replacement and contribute a week's handover."

His 'bottom line' advice for contractors:" Look to the contract to find your entitlements."

Nick Walrond, spokesman for the Recruitment & Employment Confederation's IT division and managing director of Sanderson Recruitment Plc., reflected, "Our contracts contain clauses which enable outstanding monies to be withheld for breach of contract. In exceptional circumstances we will enforce this clause and use the funds available to lessen the impact of a contractor walking out."

He gives the example where withheld money may be used, "to offer replacement resource [to the client] for a free period."

Walrond stresses this does not happen very often, supporting the idea that, at heart, IT contractors make an honourable group.

"Where their stay within a contract deemed untenable we always advise they speak to us at the earliest possible opportunity, in order that an amicable exit can be negotiated for all parties," he said.

William Knight

Wednesday 25th Oct 2006
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