Agency Workers regulations Opt Out | Are Contractors Greedy?

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Agency Opt Out
Agency Opt Out from AWR

Agency Workers Regulations Opt Out

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Agency Workers Regulations Opt Out clause – are contractors greedy or within their rights?

The following discussion on the agency opt out clause was posted to a Forum and I thought it was worth reproducing here as it is very topical.

From Contractor Ackers

I have had a series of short contracts with a client but have been sounded out about taking up a 1 year one.

I had previously mentioned to my boss that I may be able to escape from the agency as I had never signed any form of agency workers regulations opt out from the new agency workers regulations governing contract employees.

Does anybody know where I stand and how much the client would have to pay to take me direct if I invoked the agency workers regulations opt out?

Agency Advice for Contractors
Agency Advice for Contractors

I have had 3 contracts spanning 8 months so far and despite numerous emails from them asking me to opt out I have ignored them all.

I don’t think they realise this due to different departments dealing with it. The first contract was pre-regulations, the 2nd two have been after.

Any ideas ?

Dr McLaughlin’s UK Contractor Surgery

If you haven’t signed an agency opt out then you are ‘opted in’ and are covered by the new legislation which went into force for limited companies a couple of years ago.

We did a few articles on it around that time and from memory the fee was equivalent to either 8 weeks or 14 weeks of agency commission.

If you didn’t opt out, you would be best to pay this yourself rather than getting the client to pay it so that you can grab the agencies’ commission, or as much as you can get, as well.

IT Contractor Reader Dowsuave

I think, mate, that you are an unscrupulous scumbag. An organisation finds you a position within one of their clients and then you think that it is moral to cut them out of the loop so they do not get paid for the work they have done. It’s immoral even if there was no agency opt out.

Contract Recruitment agency
Contract Recruitment agency get contractors jobs

I bet you drive away from the petrol station without paying as well. I should take a long hard look at yourself mate. Yes you may get this one year contract but believe me you will never work through an agency ever again.

What is the problem with some of you contractors? You get paid loads and you always want more. I am disappointed with you

Ackers

Thanks for the replies ( or some of them).

Rules is rules is my attitude. If I can legally escape the clutches of the agency opt out for a non-extortionate pay off I will. If I can’t, I won’t and I’ll continue to work for the agency.

Seems pretty fair to me. I will investigate further.

Dowsuave

Yeah, you are a low life.

Remind me not to go to war with Ackers. I would probably have to shoot him for desertion.

The enemy offered him a better rate. Have you been to prayers today Ackers?

Cranib

The government allows you to do what you are planning to do. That’s the law. He didn’t sign an agency workers regulations opt out. The question is what will the Agency do?

Will they sue to challenge it? What happens next time you’re out of contract? Would they ever work with you again? Would ANY agency?

Be careful. Better to let contractors group IPSE or someone else fight a test case on your/our behalf, I’d say, because there is a case to answer if this were to happen.

recruitment agency blacklist for contractors
recruitment agency blacklist for contractors does not exist

Dr McLaughlin

Two points:-

  1. There’s no such thing as an agency blacklist – and there are loads of agencies around.

  2. He has already served his original contract with the agency and didn’t sign an agency opt out. Agencies have in the past tried to use restraint of trade practices as if they ‘owned’ the contractor in perpetuity with the client (in effect). The Government has now put this right.

Ackers

Thanks again Dr McLaughlin. I think it will be the client who will be negotiating for my release if things work out that way so I’ll pass on the info and leave it to them. I would guess a compromise would be reached.

How are the agencies approaching this at the moment? Are they including an automatic agency opt out in the first contract or do they have to actually ask a contractor to sign a specific agency opt out.

Dowsuave

Let the people speak. I still think you are a cock Ackers. I don’t think you should be encouraging him Dr McLaughlin. Why try to cut the Agency out of the loop? That’s biting the hand that feeds you. You will surely get your come uppance Ackers. We know who you are and the Blacklist awaits you and quite rightly so.

Contract With Agency
Contract with Agency

SCUMBAG SCAB.

Anyone agree with me?

Dr McLaughlin

Ackers isn’t breaking his contract with the agency. He is going to fulfill the terms of it till the contract runs out. He hasn’t signed an agency opt out.

However, the agency has what is now an illegal clause in the contract (as he has not opted out) which imposes an illegal restraint of trade on his practising his business.

He is not tied by that illegal clause so he can now go direct at the end of his contract.

It his agency that is acting illegally – not Ackers.

Contract job atgencies
Contract Job Agencies

Dowsuave

Ackers says that he has done a number of short term contracts for the client through the agency. The agency introduced him to the client. Ackers was grateful for the opportunity.

Now he wants to cut the agency out without the agency being recompensed for the introduction.

It is fair enough if the client pays a large severance fee but the agency is there to find labour. Clients will rue the day that they put agencies out of business by taking the agencies’ contractor direct.

Agencies may not appear to do much for their fees but if they are not their clients contractors will find their lives much more tiresome.

Has Ackers settled his account yet?

Dr McLaughlin

One can argue the rights and wrongs of the case from a moral point of view and there are definitely two sides to this.

Opting Out of Agency Workers Regulations
Opting Out of Agency Workers Regulations makes no sense for contractors

However, legally Ackers is in the right. Ever since the new law came into force, the agency now only ‘owns’ the contractor for the period stated in the contract. They don’t own them in perpetuity (in effect), unless the contractor opts out of the regulations. Ackers quite clearly has not

Dowsuave

Maybe the agency should have sought his agreement before putting him in there.

But why would the contractor want to go direct anyhow? Is it just because he can? I think you would be better off sticking with the agent. What happens when you need another contract?

Dr McLaughlin

The reasons would be:-

  1. You can take the agents cut as well – or at least part of it
  2. You own the client. Contractors seldom tout for more business from a client because they don’t ‘own’ them.

There’s lots more business there if they just would ask for it. As an ex Chief Information Officer I know I would have listened favourably if a contractor, or group of contractor,s come to me with an idea or quote for business.

However, in 3 years none of the 20 contractors I had ever did. That agency clause really stifles business generation for contractors.

Having this client and perhaps other clients would help contractors get outside IR35 as well.

  1. What happens when you need another contract? You go to one of the legion of other agencies.

She buddy

From past experience the agency/contractor relationship only lasts as long as the contract. Going direct, in this instance, is not going to impinge Ackers chances of getting future work.

Devious Agencies
Devious Agencies and their dirty tricks on contractors

I have never worked for the same agency twice.

Dowsuave

I rest my case. All contractors want to get their hands on the agencies cut. Why not go direct in the first place then, scumbags? Ah! It’s because 100 cold calls a day is not something you really have the personality to do.

You should face it. The agency introduce you to the client. Yes the client has to pay a bit more to cover the agencies costs of operating, salaries, offices, and all other overheads. This includes a huge element of risk taken by one of the business owners in the first place. Yet, you contractors begrudge them their cut. You want to do them out of this.

So, what if the client only wants you, initiall,y for a one month contract and then you can go direct? It does not seem fair.

Greedy f ers

Dr McLaughlin

Contractors think that it is fair enough that agencies get a cut for the contract that they negotiate for them.

If they want to take a cut for longer, then they should negotiate a longer contract for the contractor.

However, it is kind of Mafia-like to try to ensure that the contractor is excluded from doing business with the client AFTER THE CONTRACT HAS ENDED. After all the contractor has signed no agency workers regulations opt out.

Not only that, it’s no longer legal (if ever it was).

Agencies may feel that they deserve to be able to stop the contractor doing business with the client after the contract has ended. That is not fair AND it is not legal.

Cut Out the Agency
Cut Out the Agency and go Direct

If the contractor is not able to deal with the client after the contract is ended then he surely is just a disguised employee of the agency.

Dowsuave

Without the agency the contractor would not have met the client. Therefore the two other parties should continue to recognise this financially.

End of story.

UKContractor.com Comment

Where does everybody else stand on the agency workers regulations opt out?

Are contractor being greedy? Do the agencies deserve to take a cut on future contracts?

Or should the contractor be able to do business with the client directly once he or she has fulfilled his or her obligations under the terms of the original contract?

What do you think?

Comments in the Comments section below.

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1 COMMENT

  1. Personally, I feel that there a few things at play here.

    For a start, and irrelevant to the topic but worth saying nonetheless – Dowsuave is incredibly abusive, and quite unprofessional.

    On point, however, an agency does a finite amount of work – in most cases. They should receive the margin that they negotiated between their respective parties for the agreed upon work. Yes, recruitment consultants are good at sales and much better than your average contractor. They also have to make lots of calls, chase lots of leads, do lots of research, and take an often unfair level of abuse and criticism – all that, however, is in the past once the contract is signed. It is within their interests to factor that into their rates, and fair to do so.

    It’s not fair to continue to charge for that level of workload, or skill, when in fact pertaining to the contract at hand the work is no longer taking place or the skill no longer being used.

    This would mean that for a three month contract, for example, the agency would be paid in fulfilment of their contract – for that period of time. After that, there are other reasons one might continue – the client, for instance, might want to keep their finances streamlined by having a single bill to pay. The contractor might see the continued benefit of passing off the accounting burden and financial risk to the agency.

    Really, the agency becomes a payment processor at the end of the contract. The original fee is difficult to justify, if it’s a continuous margin on top.

    I’ve had, for instance, an agencies admit that their profit has been achieved, and offer to pay me more or charge less out – as the overhead has already been covered.

    In the rare instances that an agency provides additional services and value adds – then, perhaps there is a benefit. Then, however, the it’s the agencies job to sell those benefits to all parties. They can’t very well create compulsory purchases.

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