Many contractors use agencies as a reliable way to source contracts. Unfortunately some cases of bad practice among agencies have given the sector a bad name, but as long as you do your research and forge relationships with reputable agencies then you won’t go far wrong.

“The image of both agents and contractors could do with improvement, comments, Jason Luckhurst, managing director of recruitment agency, Practicus Ltd. “There are significant elements in both camps that let the sector down. However, the biggest influencing factor in their behaviour is the client,” he explains. “Recruitment has become a commoditised industry due to excessive preferred supply lists and procurement initiatives designed purely to reduce costs rather than improve candidate quality.”

Why use an agency?

Most contractors or freelancers will use an agency at some time during their working life and the benefits of doing so are clear; they help you to find work and they market your services. However, one of the most important aspects is pay. A good agency will pay a contractor even if they haven’t received the money from the client. However, dissatisfaction with agencies is rife and many contractors feel undervalued and not properly represented by their agencies.

The conflict

One of the many frustrations that contractors have to deal with is agencies not returning phone calls, or forgetting about them while they are on site with the client. Other complaints include agencies forbidding contractors to go for other jobs, once the agency has put the contractor forward to a client. This can mean the contractor is left in the lurch if the first job falls through. An agency won’t get many clients if it doesn’t have contractor CVs to put forward but this can lead to the advertising of ‘fake’ jobs to attract contractors, meaning a contractor can waste time putting themselves forward for jobs that don’t exist. Money lies at the root of many of the problems contractors have with agencies, argues Luckhurst – the agent will usually be paid from 5% to 25%, depending on the industry and sector. But, Luckhurst explains, driving down costs is what can lead to poor service from agencies.

“Some agencies do not truly understand the specific value that contractors add to their clients. The client drives the agency fee down – which drives the cost of recruitment down – which drives the quality of the agents employed in the agency down – which drives the service levels to contractors down. You get what you pay for at the end of the day!”

Working with an agency

Some agents are happy to take CVs, others have a more rigourous vetting process in place before they will take you onto their books. Start by looking at agents offering a work opportunity you may be interested in. You will need an agent who can use their client base to find you work, offers good contract terms, is prepared to take time to get to know you and your skills and expertise, who will pay promptly and who has projects to offer you.

Try to find out as much as you can about the contract from the agent before you give permission to send your details to the client. Don’t let agents put you forward for a role for which you are not suitable – it’s worth noting that agents are required to ask your permission before submitting your details to a client.

Sorting out a contract

The contract lies at the heart of the relationship you have with an agency and provides a formal definition of the business relationship between you and the agency, so you need to make sure you’re happy with it before signing. For freelance contractors who might be viewed by HM Revenue & Customs as “disguised employees” within the IR35 legislation, having sound contracts in place is all the more important. In these circumstances it can help to have your contract checked out, and, if necessary, ask for the agency to amend it. IPSE has negotiated special rates with a number of suppliers who provide contract review services for members.

  • IPSE has an Approved Contract scheme for the benefit of IPSE members, participating agencies and the wider freelance consulting and contracting community.

The aim is to make available as standard, commercially sound, business-to business contracts suitable for freelance businesses operating outside IR35. IPSE approval of a standard agency contract indicates that IPSE believes that it represents an acceptable model contract, where it is used in its original form. It must also reflect the real contractual relationship between the parties and must not be contradicted by other factors. As well as being reviewed by a leading status expert from an IR35 perspective, an approved contract also undergoes a basic commercial terms review. And these contracts are available from some recruitment agencies such as Practicus. “Look for IPSE-approved contracts,” says Luckhurst. “Encourage all agents you speak to to get IPSE-approved contracts in place. The more people support a common framework, the stronger that framework will be, the greater the protection for everyone.”

Getting the right rate

When you have an interview with the agency remember it is a two-way process and your chance to get what you want. If the client really wants to hire you this gives you a stronger hand to take a larger share of the money being paid to the agent. The rate the agency is paid can make a big difference to your relationship with the client. For example, you are getting paid £25 per hour and the client is paying £50 per hour for your services. All clients expect to pay an agency margin, but some agents have two-sided non-disclosure clauses, so the client may, in this case, think you are a £40 per hour freelancer. This will have an impact on the level of expertise the client will expect you to have. This in turn could have a significant effect on the relationship you have with your client during the contract.

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