Direct Contract – I want to ditch my agency

Direct Contract
Direct Contract

Direct Contract with Client

Ronnie wants to ditch his agency and have a direct contract with the client. Here is his question.

I went for an interview and got the job. Now I intend to call up my new boss and try to cut the agency out.

He is a contractor himself and I think he may be up for it. We discussed agencies at the interview and I don‘t think he is over keen on them.

It seems to me to be a no-lose situation. Even if he says no, he is hardly going to grass me off to the agency is he?

If I do pull it off I should be able to increase my earnings to pretty close to what I was getting during the boom – so it is worth a shot.

It means that I would then have my own client no one could prevent me from talking to him about future work.

I‘ve got another couple of interviews still to do if this one goes badly.

Dumping the Agency and Going Direct to Clients
Dumping the Agency and Going Direct to Clients for uK contractors

What would you do, Dr. McLaughlin?

Dr. McLaughlin’s Answer

Well, strictly on moral grounds you don‘t have a leg to stand on. The agency did the work of finding you a client, and therefore deserve the commission for doing so.

There‘s also the possibility that the client might shop you to the agency, and even of they didn‘t, would they want to take someone on who was prepared to double cross his agency?

You would always have the worry that, all the time that you are on the contract, the agency might find out that you are there and kick up a stink, demanding their commission from the client.

You would also have some other disadvantages too. Many clients are notoriously late payers and you might wait weeks or months for payment.

Direct Contracts advice
Direct Contracts advice

Some people would say, also, that it might make you more liable to IR35, although with recent IR35 cases that argument has been weakened.

Agency Regulations

Under the agency regulations, the agency can‘t stop you going direct now at the end of your contract and this may be a better bet for you. That’s unless, of course, you have taken the IPSE-negotiated opt out, which would prevent you from doing so.

Agencies can no longer prevent you from talking to the client about future work, even during the contract.

My advice would be to sit tight for the contract duration, and then talk to the client about new work as you get near the end of your current contract. That’s the time to get a direct contract.

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