Contractors' Questions: What if I quit without giving notice?

Contractor's Question: I have a contract that runs until December but I have been offered a permanent position which I would like to take. My contract has a clause in it that states 'The Service Provider may not give notice and is obliged to work the full term of the contract'. The contract has a 28 days' notice period for the Agency / Client back to me. What happens if I leave the contract disregarding this notice period, and what risks might I expose me or my company to as a result?

Expert's Answer: This clause is very clear – the Service Provider (the limited company) has a contractual obligation to work until the end of the contract term. Immediately it looks likely that you would be in breach of contract if you were to walk out on this contract.

Unfortunately the fact that the Agency is entitled to terminate with 28 days' notice is not helpful.

So what is your exposure? The Agency may claim compensation for the loss sustained as a result of the breach. Without seeing the contract, we can only speculate as to what might be included in such a claim. Certainly it is likely to include the Agency's lost margin. In addition it may include (for example) indirect losses sustained by the Client due to the work being left unfinished and the Agency's legal costs incurred in pursuing their claim against you.

Nevertheless, there are some options for you to consider. There might be a clause in the contract allowing your company to utilise a substitute or a subcontractor. If so, you may be able to hire another individual or engage another contractor to perform the work on your company's behalf, thereby freeing you to move on to the permanent job.

Note, however, that your company would normally remain responsible for the work so it is important to have a strong contract in place with any substitute/subcontractor that is engaged.

You may have the option to assign your rights and obligations to another party. Effectively this means that a different contractor takes over responsibility for the contract from a given date.

Check what the contract says about substitution, subcontracting and assignment and seek legal advice if you are unsure. If none of these options are available, try having a chat with the Agency and Client and let them know how you are feeling. It might be the case that they are happy to release you without liability – but make sure you get it in writing.

The expert was Will Morris, of the Contractor division at Lawspeed , a legal advisory for IT recruiters & contractors.