Legal problem in contract between agency and client

mysgies

Hi All,

I am verge of lossing my job, looking for your honest reply on this.

I am working as a contractor for a company through my limited company and got this through an agency. The client is very happy with my work and have no problem in continuing with me. But the problem is my client has to pay a good slice of amount I earn and they are not ready to continue with this. According to the client, they have a contract with agency which stats that they can't work with my limited company for 12 months after termination of the contract.

They tried to negotiate with Agency on removing this clause in turn for a lumpsum money and free me up, but agency is not ready to do so.

In such a situation my client is putting his hand back.

I have a couple of questions here -

1. Can I open another limited company and start working with my client through that, will it involve any legal breach considering the contract of my client with agency for my current limited company.

2. Can you suggest any other work around which can help me/my client to continue with involving in any legal stuff (umbrella or something else)?

Please advice.

Thanks
Sgies

LittleVoice

Is your limited company named or is it some reference which could be any limited company which employs you?

cazziebo

I think what you're saying here is that you are contracted through your own company to an agency to supply services to the agency's client? Is this to get round IR35?

If this is the relationship then it is very likely that the agency will have a restrictive covenant in place forbidding you to work directly with the company for a period of time (which must be reasonable and arguably a year is reasonable).

If you are the sole employee of the company, and then go in as another guise, or even as a direct employee of the agency client, then you are breaching this covenant and the agency has the right to charge an "introduction fee" to the client and can also sue you for breach of contract.

If you are the sole employee, and this is your only work, then you are breaching IR35 so you are on dodgy ground with HMRC as it is.

There is no legal way round this. When I worked employing IT consultants this way then sometimes we wouldn't enforce it if it was a particularly good client and we didn't want to endanger the relationship. When I was a client and hiring like this I would sometimes gasp at the contractor's fees but then, I didn't have the costs of PAYE admin, training, holidays etc to worry about.

sorry - I know that's not what you wanted to hear. Best I could advise is try to resolve amicably.