‘After signing a contract with an agency for 6 months, I now find out (from the client!) that the agency’s contract with the client is for no more than 3 months – and the Client says they’re not renewing their own contract with the agency, when it ends next week. The agent hasn’t even bothered to contact me to tell me what’s happening’.
One might be forgiven for assuming that because one had signed up for a contract for 6 months, one’s position and future would be secure for that period. Would that life were so simple!
There are really two issues here. The first is that, in real terms, one’s security under a contract is limited to the period of notice the other party would have to give to terminate it. Here, we have a contract under which either party has the express right to terminate, simply by giving 1 month’s written notice. It matters not whether the contract period is for 3, 6, or 12 months – the simple fact that either you or the other party can terminate it on 1 month’s notice means that neither party can say they have any contractual guarantee – and certainly not something one could reasonably regard as ‘sueable’ on – that the contract will remain in force for any longer than that one month period; maybe it will, maybe it won’t, but neither party can depend on it.
It therefore follows that (at least in general terms) there is no reason why one should assume that, just because an agency may have persuaded a Contractor to sign up for a period, the agency also has the Client signed up for the same length of time. In your case, it was clearly open to the agency to end the contract at the three month point, when its contract with the client ended - provided of course it gave proper notice to terminate. But that is something they appear to have overlooked here – an oversight that is likely to cost them.
You are entitled to presume that the agency will honour the terms of the contract they entered with you, and whilst it may be reasonable for you to invite them to clarify the position in the light of what you have been told by the Client, you cannot take what the client has said as amounting to notice to terminate – your contract, after all, is between your own company and the agency, not the client; the client cannot give you notice to terminate on behalf of the agency. Unless you yourself choose to give notice to terminate the contract (assuming the contract gives you the express right to do so), you should (and have every right to) assume that the contract will continue for the full period you signed up for, until and unless you receive written notice.
If a point comes when the client no longer requires your services, then the fact that the client no longer permits you to work will put the agency in breach of contract – you are no longer being permitted to do what you have contracted to do. Once the breach happens, you will be entitled to damages, so as to place you in the position in which you would have been, had the contract been performed. Since the agency could have terminated the contract on notice, your damages will be limited by what you would have earned during the notice period you were entitled to (ie one month, commencing on the day of the breach), and you will have a duty to mitigate your losses by doing the best you can to find another contact as quickly as you can, and giving credit for what you earn under that other contract against your damages claim for the equivalent period.
As always, we need to watch out for the hidden ‘gotchas’. Watch out in particular for clauses that may give the agency the right to terminate without notice, other than for some serious fault on your part. This, of course, can become considerably more important when the Contractor is working away from home and has to make other commitments for longer periods, such as renting a flat etc. In particular, be aware that a contract which is expressed as conditional on the contract between the agency and the client remaining in force is one which could be terminated without you being given any advance notice – hardly desirable, from the Contractor’s point of view. Look out for these terms before you actually sign a contract, when your negotiating position is strong, and whilst there remains the opportunity to make changes and ensure that the contract is reasonably balanced.
1st October 1999
I'd really appreciate your feedback on this FAQ - so mail me and tell me what you think of it, if it's been useful to you, or let me know of any specific problem you have where I may be able to help.
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