Posted on in Contracting Recruitment
The start of a new year is traditionally a golden opportunity to make a new start. For some of us it is eating more healthily, giving up smoking, spending more time with our family or getting more exercise. We cut out what we see as bad for us and aim to benefit more from the good. Many of us apply the same ritual to our finances and work life, too. We re-assess our situation and target areas we think we can improve on. For a large number of contractors, the New Year coincides with the end of their contract, leaving them with decisions to make about their next step.
In keeping with the spirit of New Year’s Resolutions, the end of one contract and the start of another is a great opportunity to make some positive changes – at any time of year. You could move on to an exciting new role, perhaps at a higher rate, either with a completely new client or elsewhere in your current organisation. If you are planning to stay in your current role, you could use the opportunity to negotiate a rate increase. Whatever changes you are making, it is vital to ensure that you will not be putting yourself or your umbrella company in breach of any of your previous contracts, especially if you contract through an employment agency.
You may think that a great way to earn more money for your hard work would be to cut out the middle man and contract directly with your end client, resulting in more money in your pocket and your client saving a few pennies too. It sounds like a win-win situation, doesn’t it? Well, be very careful if you are thinking of doing anything like this. The vast majority of agency contracts will include restriction clauses to prevent you from working directly (or through another agency) for a client they have introduced you to. These clauses vary from contract to contract, but will typically restrict you for a period of up to one year after the end of your contract.
The reason for this is simple – employment agencies make their money by taking a certain margin of the rate their clients pay for your services. Their hard work has gone into finding you – the ideal candidate – and organising all aspects of your contract, and they expect their cut accordingly. The restriction clauses they put into their contracts protect their business by preventing you from cutting them out of the loop or possibly taking business to a competitor. If you have been offered a contract directly with your end client, the most important thing is to know where you stand.
Contact your umbrella company and tell them of your plans as soon as possible, before you commit to anything, and ask them to thoroughly check your previous contracts to see if there are any restriction clauses preventing you from taking this course of action. The same applies if you have found a new role with another agency, but the end client is the same. If your new role is in conflict with your previous contract, what options do you have? You can consider buying yourself out of your contract – your agency may agree to release you from these restrictions for an agreed sum.
For example, if the clause would restrict you from leaving them for three months, they may ask you to compensate them for the amount they would have earned through supplying you for that amount of time. This would be payable by you, although your client may offer to help. There is also the option of taking a break until the period of restriction has elapsed – you could work on another contract during this time, or just take some time off. Most importantly, whenever you are considering contract changes it is important to inform your umbrella company as soon as possible. Not only does this allow them to ensure they bill for your time correctly, it gives them the opportunity to advise you on any potential problems you may encounter. If you have any changes to inform us of, or just want to find out more about how Cascade can benefit contractors, please contact us.