Agency Exclusion Clause
We received this from a contractor reader as regards the Agency Exclusion Clause in their contracts.
What I still can’t understand is why agents refuse to tell contractors what commission rate they are charging clients for the contractor’s services.
My current contract and the previous two have been through agencies that said they’re legally bound not to tell me what the rate was.
What they really mean is that they are worried I would blow my fuse if I find out what percentage of the total amount they keep for themselves.
They even, therefore, ask you not to ask the client as that would put them in a bad light and may ruin their relationship with that client.
The interesting thing is that in all the three contracts I refer to, the clients have readily told me how much the agents charge.
The current one is the one that peeves me off as the agents are taking 20% of the rate!
I think that is too high.
I suggested to the client that once this contract was over I would like to renegotiate my contract myself.
However, he said that the agents told them they cannot re-employ me for 12 months unless it’s through them!
That’s because of the agency exclusion clause.
It stops contractors going direct to the company.
Can you believe that?
Client’s Agency Exclusion Clause
So, who gives the agent a claim an agency exclusion clause on me such that they can tell the client that? There is no agency exclusion clause in my contract. However, it seems that there is an agency exclusion clause in the contract they sign with the client.
Technically, they work for the contractor rather than the other way round.
And so what is the acceptable cut for agencies – 5%, 10%, 15%, 20%?
Is there a proper and ethical range?
UK Contractors Comment
You say that they are taking 20% of the contract. However, they are adding 25% onto your contract rate.
You would consider that is too high. Any agency margins which add more than 20% to your contract (16% of your contract rate) you would consider above average.
Anything between 10% and 20% agency margins you would consider OK. Anything above that and they are taking you for a ride. If it is below that you are doing well.