Search Magnifying Glass

Contract Violation?

Question: Can the contractor work for the new Agency without violating the original contract bearing in mind he is not “providing services or products directly to the Client or End Client” since he is working for the new agency.

Background: The Contractor is contracted to the Agency and the Agency supplies the Client. The Client is providing services to the End Client. Basically, the Client provided a team to the end Client. The engagement of the Client providing services to the End Client has now come to an end and also the contract between the Contractor and Agency has also finished. The End Client does not need the full team supplied by the Client but wishes to continue to engage the services of the Contractor. The End Client wishes to do this through an entirely different Agency as this is standard company policy. There is a clause in the Contractors contract (the original contract between the Contractor and the Agency) that states:

The Contractor will not accept work, provide services or products directly to the Client or End Client during the period of this contract or for a period of six months from the termination of this contract without the written consent of the Company.

Answer: This is a common question often asked. It is important to read and understand or take legal advice when entering into a contract.

The first question to consider is whether the end client has opted in or out of The Conduct of Employment Agencies and Employment Businesses Regulations 2003. Is the work different or similar?

If the end user has not opted out, restricting a worker from working for certain parties following termination, other than through that agency may not be permitted under rule 6 of the regulations.

Assuming the end user opted out, the next question is how long are the restrictions for and is it a reasonable length of time? It is commonly accepted that a 6 month period of post termination is an acceptable length of time.

Careful reading of the clause and other additional clauses are important. Whilst it states:

The Contractor will not accept work, provide services or products directly to the Client or End Client during the period of this contract or for a period of six months from the termination of this contract without the written consent of the Company.


Whilst we understand the Contractor may be providing services through a different agency. They are still proving services, albeit through another agency. It is arguable that this is directly.

A court could interpret this using different methods of interpretation – a purposive approach – which means the purpose behind the clause is to restrict contractors for providing services “directly” Or a literal approach which could mean the contractor is providing services for the intermediary Agency directly.

It is balancing the risk and ensuring you obtain proper legal advice, otherwise you could be liable for a damages claim.

Should you wish to seek clarification and risks please contact Vantage Legal Protect.

By Contractor Doctor

Comments

Add a comment

Have any comments? Why not kick off the discussions!


Leave a Reply

Your email address will not be published. Required fields are marked *