Can contractors cut out their agent?

IR35 Test

Can the agency be cut out of the deal? Assuming you have no written agreement with the agent, the short answer is: probably, but you'll be playing with fire.

There are three points in the contract process in which you will be offered this choice.

  • First, after the interview – before signing with the agent;
  • At renewal time - you may want to change the agent if the agent tries to cut your fee or if the client no longer wants to use them.
  • During the contract - maybe the agent breaches contract by not paying.

Choose the Right Strategy

At each point in the process, you should choose a different kind of strategy.

First of all, we're assuming that you don't have any kind of written agreement with the agency stating that you are already associated with that organisation. Says David Royden, a lawyer specialising in contract law with the Manchester office of Laytons Solicitors: ''Should you have a written agreement with the agency stating that you have no right to work for their clients independently, that agreement will in most cases be enforceable in court.'' Royden points out that judges do not like to restrict anyone's right to work, but if you have agreed to that restriction in exchange for consideration (i.e. meeting the client), the judge is likely to take a dim view of your not respecting it.

A written agreement with an agent will probably be enforceable in court

David Royden-Laytons Solicitors

A Three-Way Relationship

But as Royden points out, it is usually not the contractor, but the client who has an agreement with the agency. The client usually stipulates that the company will not hire candidates that the agency proposes. This agreement is also enforceable in court, but, of course, it doesn't affect you, the contractor, directly. The client has a lot of clout with the agency, and often the client can pressure the agency into allowing you to work directly for that company. If you want to take the job, ask the client whether or not trouble with the agency may be expected.

Trouble With the Agency

The problem is, though, that you will certainly never get work from that agency again. Okay, you may say, there are always other agencies. But agents talk to each other, and you do develop a reputation as you continue to work as a contractor. If you make a practice of cheating agents, sooner or later word of it could catch up with you.

Changing Agents Midstream

But what if the client and the agency disagree, and the client says that you should work for that company through a different agent.

''Here you are on firmer ground,'' says Royden. ''As explained, judges do not like to limit anyone's right to work without good reason. You have no agreement with the first agent. So this becomes the client's problem, and you are probably free to make the change.''

Judges do not like to restrict the right to work for anyone freely

David Royden-Laytons Solicitors

When An Agency Doesn't Do its Job

Finally, what happens when an agency doesn't pay you on time, or fails, in some other important way, to fulfil the terms of your contract?

Here you have a right to terminate your contract claiming breach of contract, and you can move on to another agent or to work directly for the client. You should first write to the agency and state that you will not tolerate the breach of contract if it continues. If it happens again, you can terminate safely without further issues arising.

Published: Wednesday, August 01, 2007

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited. Please see our copyright notice. If you want to use any content you have seen on this site then please request our media pack and ask for details of our Content Licencing Service.


Readers Comments...


  
Bookmark and Share
  
     
  

Latest Site Updates

P35 guidance: unsure contractors should answer ‘no’ to service co question, says HMRC P35 guidance: unsure contractors should answer ‘no’ to service co question, says HMRC

Contractors are not legally obliged to answer the P35 question 6, ‘Are you a Service Company?’, and if they’re unsure should answer ‘no’.

No certainty from HMRC’s new IR35 framework, but the policy debate must be sustained No certainty from HMRC’s new IR35 framework, but the policy debate must be sustained

No certainty for limited company contractors yet, but the policy debate is far from over, say OTS Tax Director John Whiting and PCG’s Simon McVicker.

IR35 certainty for contractors? So close and, perhaps, not so far IR35 certainty for contractors? So close and, perhaps, not so far

Contractors are very close to enjoying a potential three-year rolling’ IR35 amnesty’ if we keep our nerve and help HMRC improve its new test regime.

“Keep calm and contract on”, IR35 experts tell contractors following HMRC’s new tests “Keep calm and contract on”, IR35 experts tell contractors following HMRC’s new tests

It’s IR35 business as usual for contractors – IR35 experts Andy Vessey of Qdos and Kate Cottrell of Bauer & Cottrell respond to the new HMRC tests.


  
  

Twitter

  • UK unemployment falls by 45000 in the three months to Match: ONS Labour Market Statistics: http://t.co/TirSQ6ai

    23 hours ago

  • Manufacturers urge government to offer more support to the sector: BDO survey http://t.co/73Z9AUFz via @BBCNews

    Wed, 16 May 2012

  • No certainty from HMRC’s new IR35 framework, but the policy debate must be sustained http://t.co/idtjsXEj

    Wed, 16 May 2012

  • IR35 certainty for contractors? So close and, perhaps, not so far http://t.co/8v7LDXcI

    Tue, 15 May 2012

  • Financial sector jobs at six-month high: Morgan McKinley London Employment Monitor April 2012 http://t.co/8qbyoEje

    Mon, 14 May 2012

  • Interims won't take public sector assignments under PAYE says Interim Management Association chair http://t.co/uMXMguQi via @Publicleaders

    Mon, 14 May 2012

Follow Us On Twitter


  
     

  
  

Contractor solutions

Contractors Handbook AM Limited IR35 Test
  
Contractor accountants - pricing checklist
  

Contractor solutions

Bedouin Group

No more IR35. Retain up to 85% of your earnings.

Choice Premier Pay+

Take home up to 85% of your pay. IR35 solution.

Contractors Handbook

The expert guide for UK contractors and freelancers

InTouch Accounting

Person to person contractor accountant. Free IR35 review.

Parasol Group

Umbrella or Limited? Guidance on best options, and take home pay.

NA Bedouin Group D J Colom Accountants Contractor Financials NewsNow
  
Elevate

  

The UK's leading contractor site. Independently audited traffic (ABC) – 156,346 monthly unique visitors.