Restrictive clause in contractor agreement

Vin82

Hi all,

I worked via an agency with a client for more than 4 year as a contractor. My contract was ended on 27th of March 2020.  The client changed their business policy for contractors and now only hiring contractors through preferred suppliers, my agency was not in the list of preferred suppliers and hence the client said they won’t engage with that agency. I got a new role with the same client via their preferred supplier (starting from 30th March 2020). I have my two months invoices due with my previous agency and they confirmed on 31st march that I will get the payment for both invoices on 24th April 2020. Instead of the payment I received an email on 27th April saying you have breached the contract as you have joined the client directly and that is why it’s a compliance issue and we are stopping the invoice payment until this is addressed. I am trying to call them and contact them via email to discuss and understand but I am not getting any response only an email came saying we will come back when compliance team will provide an update.

 I am struggling with the finances as my money is blocked by the agency. Can the expert on this forum help me to suggest the way out to get my money from the agency?

 Thanks,

Viny

Marcon

Have you 'joined the client directly', or are you working for them via another agency who is on their preferred supplier list? What exactly did your contract with your previous agency say?

Vin82

I joined the client via preferred supplier on a new role as the client has stopped dealing with any other agency than the preferred suppliers. 
The contract of my previous agency says : 

1. The Service Provider and its Directors or Consultants hereby acknowledge that the Company expends significant resources in sourcing and maintaining its clients and is entitled to protect its commercial interests. The Service Provider and its Directors or Consultants shall be jointly and severally liable to pay to the Company a contractual fine equivalent to eight weeks' worth of the fee rate passing at the time where the Service Provider and its Directors or Consultants end the contract without serving the full notice period agreed and outlined in Schedule 1. The Company’s right to raise additional claims remains unaffected.

2.  Neither the Service Provider and its Directors or the Consultants shall enter into any agreement, whether directly or indirectly, to supply contract Services/services of a similar nature to the Client or a subsidiary or associated company of the Client or to the Client’s client or the Client's customers, other than through the Company for a period of 12 months following the termination of this agreement. The Service Provider and the Consultant shall be jointly and severally liable to pay to the Company a contractual fine equivalent to ‘twelve weeks' worth of fees passing for the contract at the time of the violation for each case of violation. The Company’s right to raise additional claims remains unaffected.

 
please suggest what  I can do here ?

Thanks,
Viny

steampowered

The terms of the contract do appear to provide that you may be liable to pay a fine of 8 weeks' pay for not giving them the proper period of notice (did you do this?) and 12 weeks' pay for breaching a non-compete provision.

However, in legal terms those provisions are wide open to challenge on the grounds that:
- They are "penalty clauses" - which are not enforceable in English law.
- They are "restraints of trade" - which are also not enforceable in English law.

Personally I would not be rolling over and would be escalating this. Otherwise you are at risk of being messed around indefinitely. Send them a "letter before action" asking for payment within 14 days, followed by issuing small claims proceedings if payment is not made. 

It's very likely the company will fold and pay long before it gets anywhere near court - and if it does get into a court, it'll be in the small claims track so easy to represent yourself.

nicechap

Vin82 said:

I joined the client via preferred supplier on a new role as the client has stopped dealing with any other agency than the preferred suppliers. 
The contract of my previous agency says : 

1. The Service Provider and its Directors or Consultants hereby acknowledge that the Company expends significant resources in sourcing and maintaining its clients and is entitled to protect its commercial interests. The Service Provider and its Directors or Consultants shall be jointly and severally liable to pay to the Company a contractual fine equivalent to eight weeks' worth of the fee rate passing at the time where the Service Provider and its Directors or Consultants end the contract without serving the full notice period agreed and outlined in Schedule 1. The Company’s right to raise additional claims remains unaffected.

2.  Neither the Service Provider and its Directors or the Consultants shall enter into any agreement, whether directly or indirectly, to supply contract Services/services of a similar nature to the Client or a subsidiary or associated company of the Client or to the Client’s client or the Client's customers, other than through the Company for a period of 12 months following the termination of this agreement. The Service Provider and the Consultant shall be jointly and severally liable to pay to the Company a contractual fine equivalent to ‘twelve weeks' worth of fees passing for the contract at the time of the violation for each case of violation. The Company’s right to raise additional claims remains unaffected.

 
please suggest what  I can do here ?

Thanks,
Viny

I'm not a lawyer but it sounds like you've broken your contract with your previous agency. I would suggest speaking to a professional (many solicitors do free 15/30 minute consultations) to help you respond and minimise your exposure.

Vin82

Thanks for the helpful and quick responses ,  I did give the required notice of one month to the previous agency and mentioned that my contract will be ended on 27th march instead of 31st march as the client has changed their policies and the Agency acknowledged the notice. 
In this case when the client has decided to only deal via preferred suppliers  I am not causing any damages to the business interests of the previous agency. They are not in any competition to bid for any role for the client. I have not joined the other agency because I was offered more money as my rate is still same. The fact was that I had no option to go via previous agency. Also I am in a different role now so performing very different activities then what I was doing previously. 
They are not answering my calls and emails , only send an email that compliance team is looking in to it and we will come back when we hear from them , This sounds like no time limit when they will settle this. 
When I raised my invoice on 27th march , I received an email on 31st march confirming that I will get my payment on 24th april. But I didnt get any payment instead an email was sent on 27th april  mentioning that payments are on hold untill the breach is discussed.
Thanks,
Viny 

 

nicechap

Vin82 said:

Thanks for the helpful and quick responses ,  I did give the required notice of one month to the previous agency and mentioned that my contract will be ended on 27th march instead of 31st march as the client has changed their policies and the Agency acknowledged the notice. 
In this case when the client has decided to only deal via preferred suppliers  I am not causing any damages to the business interests of the previous agency. They are not in any competition to bid for any role for the client. I have not joined the other agency because I was offered more money as my rate is still same. The fact was that I had no option to go via previous agency. Also I am in a different role now so performing very different activities then what I was doing previously. 
They are not answering my calls and emails , only send an email that compliance team is looking in to it and we will come back when we hear from them , This sounds like no time limit when they will settle this. 
When I raised my invoice on 27th march , I received an email on 31st march confirming that I will get my payment on 24th april. But I didnt get any payment instead an email was sent on 27th april  mentioning that payments are on hold untill the breach is discussed.
Thanks,
Viny 

You need to understand what you agreed to, namely that you wouldn't work for one of your agency's clients for 12 months after they lost the contract or you leave their service. You've clearly done that. What their losses are, whether they can "fine" you, (most companies can't) etc will provide income for lawyers whilst the dispute drags on.

Vin82

so what is the option I have to get my invoice paid to me as I am really tensed about the situation and this is also causing disturbance in all aspects of my life.
Thanks,
Vinay

nicechap

Well steampowered gave you an action plan earlier, and I suggested getting a free consultation, others may come up with different solutions.

Vin82

Thanks, The amount of the invoices is 24k  , does it comes under small claims?

Marcon

Yes. Google on 'make a money claim online' for full info.