Contractors Going Direct – They must now be allowed to go by agencies

Contractors Going Direct
Contractors Going Direct

Contractors Going Direct to Clients

The new AWR laws will see more contractors going direct to their clients.

John Antell considers the implications of The
Conduct of Employment Agencies and Employment
Businesses Regulations 2003

The Conduct of Employment Agencies and Employment Businesses Regulations 2003 apply to most IT and engineering contractors contracting via an agency.

Limited company contractors can opt out but it is unlawful for the agency to make assignments conditional upon a limited company contractor agreeing to opt out.

Regulation 10 restricts the ability of agencies to stop contractors ‘going direct’.

Where a contractor currently contracting via an agency wishes to ‘go direct’ and enter into a contract with the client when his contract via the agency ends, the agency cannot now prevent this.

Direct Contracting for IT Contractors
Direct Contracting for IT Contractors

The contract between agency and client may have a clause providing for the client to pay a transfer fee. However, that clause will be unenforceable unless the contract also provides the client with the option of retaining the contractor via the agency for a limited further period. That is generally 8 weeks but it can be up to 14 weeks in certain circumstances. After that the contractor can transfer without the agency charging the client any transfer fee at all.

Regulation 10 came into force for new and existing contracts on 6th July 2004.

Contractual Disputes and IT Contractors

John Antell is a barrister specialising in contractual disputes (particularly those involving IT, engineering or construction) and in employment law. Solicitors would normally instruct Barristers. However, chartered engineers, Members of the Institution of Electrical
(whether chartered or not) and some other professionals can contact barristers directly for advice.

Neither the author nor the publisher can be held responsible for any actions undertaken as a result of the opinions expressed in this article. These are necessarily of a general nature. They cannot be a substitute for individual legal advice on your own particular situation.

© John Antell

We will publish more about contractors going direct to clients.