Contractors' Questions: Is my agent in breach of contract?

Contractor's Question: Last month I agreed a six-month extension for a client I provide services for, and this contract was agreed through the agency I go through. My client has advised all agencies that it needs a 7% reduction in costs with its agents, and my agency has passed this cost to me. My agency has asked me to
accept a new contract under the new Terms and Conditions which include this 7% reduction. Is this a breach of contract from my agency?

Expert's Answer: If you refuse, the agency will have a choice of two actions:

1) If they have the right to terminate the contract prematurely and without cause, they may do that; the contract may provide for termination on notice, or it may provide that they can terminate immediately and without having to give notice. Even if they give notice, if the client decides they don't want you to work the notice period, whether or not they have to pay you during the notice period will depend on the correct interpretation of the contract

2) Alternatively, if they don't have the right to terminate prematurely (which I have to say in my experience is unlikely, though not impossible), they may let the extension continue.

In short, if the agency does something they are not permitted to do by the contract, then they may be in breach. But they may well be able to get at what they want by a different route.

So no - they are not in breach by asking; but if you don't accept, you may well find them using any contractual provisions that entitle them to terminate early.

The expert was Roger Sinclair, a legal consultant at Egos, a legal advisory for IT contractors.
 

Editor's Note: Further Reading - Contractors' Questions: Is my umbrella in breach of contract?