Contractor Client or Agency Client – Whose Client is it?

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Contractor Client or Agency Client
Contractor Client or Agency Client

Contractor Client or Agency Client?

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The person we deal with at a company, is it a contractor client or agency client?

We received the following detailed reply to our article, published in July, from an agent about clients belonging to the agent and not the contractor and thought it was worth publishing.

So, whose client is it? A contractor reader has his views on whose client it is.

I would like to respond to the article “Ten Reasons the Client Belongs to the Agency and not the Contractor” and will put my comments after the agent’s points:

Current Client of contractor
Current Client of contractor

No IT Contract

  1. “The IT contractor has no IT contract with the end client – only the agency has. The contractor’s contract is with the agency for which he or she is a supplier”.

This is self evident and is purely due to the way in which the market is currently structured.

Cannot Go Directly to Client

  1. “The IT contract stipulates that the IT contractor cannot look for new work from his ‘client’ while he or she is working there. The main reason for that is that it is the agency’s client”.

I disagree. The main reason for this clause is to prevent the contractor from negotiating new work directly with the client and therefore robbing the agency of repeat business.

This clause could be modified to allow the contractor to seek new work from the client and, if he/she is successful, the new work could be handled via the existing agency for a substantially reduced percentage on the agency’s part.

This would allow the agency to leverage the goodwill that the contractor has built up with the client by the successful delivery of their services.

Furthermore many hiring managers are technical people who have a technical job to do, hiring is a necessary evil and dealing with high volumes of annoying calls from agents is a distraction to their primary job role, this would reduce that overhead on them.

Poaching Clients

  1. “The contract states that the contractor cannot work for the client for a set period, e.g. 9 months after the contract has ended. If it were the contractor’s client, then he wouldn’t have to sign this clause. This is to prevent him poaching someone else’s (i.e. the agency’s) client”.
Direct Contracts
Direct Contracts – contractors going direct to clients

This is merely a veiled attempt by the agency to ensure that, wherever possible, they secure repeat work, as a direct result of the good services provided by the contract, and with absolutely minimal input and effort by themselves.

We’ve all experienced agents who squirm when there is the possibility of an extension and we want to re-negotiate our rate.

Negotiating Rates

  1. “The client doesn’t negotiate rates with the contractor before he or she starts, but does it with the agency, their supplier”.

This is instigated by the agency, not the client nor the contractor. Agents frequently state not to discuss money with the client. Of course this would not be an attempt by the agency to keep the contractor in the dark about the hourly rate they are actually going to agree with the client is it?

Renewal Time Increases

  1. “The client doesn’t normally discuss increases at renewal time with the contractor but with the agent with whom they have the contract”.

Again this is a modus operandi which is created by the agent. Many contractors would be more than happy to do this themselves, and get the agency to reduce their percentage at the same time, after all it is the hard work by the contractor which has won them the possibility of a renewal (clients don’t offer renewals to contractors who consistently under perform!) In addition the workload here on the agent is minimal.

Contract Renewal Time Rise
Contract Renewal – Getting a Rise

Terminating the Contract

  1. “The client doesn’t normally terminate the contractor directly, but through the agency. They can’t, as they don’t have a contract with the contractor. They MAY inform the contractor, but they always tell the agency”.

This is semantic quibbling, nothing more!

Whether they ‘inform’ me, but ‘tell’ the agency makes no difference to the outcome. As someone once said – difference which makes no difference, is no difference)

Taking the Client to Lunch

  1. “The contractor never takes the end client out to lunch and pays, and agents almost always do, which is a fair pointer to whose client it is”.

No? How does he know this? Am I the only contractor who has?

Also if the contractor was directly negotiating with the client over additional work, or a renewal, then I believe most contractors would be more than happy to.

This is not philanthropy but business practice and as such it is done with the expectation of material gain, not for any other reason.

Hiring Other Contractors

  1. “If the client is happy with the contractor and wants ‘another one’, he goes to the agency and not the contractor”.

What a surprise! I don’t keep an up to date database of hundreds of contractors, what would be the point – the agency does.

Going Through the Agency

  1. “If the client wants to incentivise the contractor or pay him or her a bonus, he must go through the agency, probably with the agency taking a cut”.
Big Rate Rise
Big Rate Rise at renewal time for contractor

Again this is only due to contractual obligations and clauses.

Client Relationship

  1. “There is seldom a supplier / customer relationship between the client and the contractor, the way there is between the client and the agent. The contractor often refers to the client as ‘the boss’ which the agent never does. The client looks upon the contractor as a temporary employee, which is what he, or she really is”.

Self evident again. Maybe the agent should start to think about not just the client, but also the contractor, as being ‘the boss’ after all who generates the revenue that pays the agent’s wages?

I always thought that was me, maybe I’m naive and misinformed!

I have, in the past, had the distinct pleasure to work with a couple of agencies who considered that their clients (both employing company, and contractor) as ‘the boss’ and who were happy to admit that they never forgot exactly who did pay their wages.

It’s a great shame that these agencies are the exception and not the rule.

Contractor Client or Agency Client – In conclusion:

I really thought that this article would be about business relationships and practices which govern, to an extent, the clauses put into a contract and whose client it is.

Rather it has turned out to be an attempt to defend and rationalize a number of the more restrictive and exclusionary clauses which agents are able to keep in their contracts as a result of having a stranglehold over the market.

Contractor Perceptions
Contractor Perceptions of Agencies

The contractor has already been very open and honest with the agency about rates etc., whilst the agencies still dislike having to disclose their percentage.

Remember the clause which says the contractor may not discuss his rate with permanent employees of the client company extends to include those personnel of the company who negotiate with the agency.

The only reason for this can be to prevent both client and contractor from very quickly figuring out what percentage the agency is making!

Handling agencies is a skill.

So, is it a contractor client or agency client?

So, whose client is it? What do YOU think?

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