Dear Contractor Doctor
I am an IT contractor trading through my own limited company. As I’m currently in-between contracts, I recently received a call from one agency offering a contract at £300 a day and asking if I could attend an interview.
Within a day of the first agent calling, I then took a call from a second agency about the same contract and client, but offering £350 a day.
Do I have to contract with the agency that first sent my CV to the client?
Contractor Doctor says:
“Contractors can effectively do what they wish unless there is some reason that they can’t,” notes Roger Sinclair of contractor legal specialist Egos. “In this context, we need to examine whether there is a contractual barrier preventing the contractor choosing to deal with the better paying second agency.”
And, in Sinclair’s experience, the client’s view must also be considered; he points out that some risk-averse clients will choose to avoid disputes between agencies and contractors that threaten to turn into legal action.
“Through no fault of their own, contractors can become unwitting casualties of a client’s decision not to select a contractor in order to avoid a dispute with an agency. This is especially prevalent in times when contractor supply exceeds demand,” he adds.
Contractual barriers and the conduct regulations
Whether restrictions in an agency’s terms and conditions are enforceable will depend on the specific wording, which will vary from agency to agency.
But as Sinclair explains, a restriction can only apply if the contractor has opted out of the conduct regulations prior to any contact with the client: “Unless the contractor and his/her company have expressly opted out of the Conduct of Employment Agencies and Employment Businesses Regulations prior to the contractor being introduced to the client, the regulations will apply.”
He continues: “Regulation 6 of the conduct regulations expressly prevents an employment business from ‘detrimental’ action relating to work-seekers subsequently working elsewhere. That would allow a contractor to choose to contract with a client via a second, higher-paying agency without fear of legal action by the first agency.”
However, the converse is also true. If the contractor has opted out of the conduct regulations, then any provisions preventing the contractor from contracting with the client except through the first agency may be enforceable, as long as they do not fall foul of restraint of trade principles.
Risk-averse clients are a very real barrier
According to Sinclair, a potentially greater constraint, which can be of particular concern when the contracting market is depressed and there are more contractors than contracts, is the client’s position.
In times of supply surplus, a risk-averse client faced with a dispute over which agency is supplying a contractor may simply choose to disregard that contractor and move on to another
Roger Sinclair, Egos
“In times of supply surplus, a risk-averse client faced with a dispute over which agency is supplying a contractor may simply choose to disregard that contractor and move on to another,” he explains.
Contractors in a position where they have been offered a higher rate by second agency, after first being put forward by another agency, and have not opted out of the conduct regulations, can choose to contract with the second agency at the higher rate.
However, contractors who have opted out should check the terms of the first agency for any restrictions that may prevent them from contracting with the client via a second, different, agency. If in doubt, get advice.