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Guest post by: kunwarpal solanki Become an Author

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Contractors are often duped by wily agencies and need to know what to look out for when dealing with agencies.

They can chose their Umbrella Company and their Contractor Mortgage company but they can seldom choose their agent as they tend to have to take whatever opening comes up from whatever agency have the requirement .

The biggest mistake that contractors make is in that the agency that they deal with is ‘their agent’. They imagine that they are like agents for actors who normally take 10% of what they can get from a client and so are motivated to get as much as they can for the actors that they serve.However, it is very different in the contractor / agent relationship. Indeed it is only contractors who call them agents as they tend to call themselves recruitment consultants.

Contractors in are sometimes better protected as they can ask the advice of their Umbrella Company on rates whereas Limited Company contractors are very much on their own when negotiating.Indeed, some Umbrella Companies may have relationships with particular agencies and may insist that their contractors get a certain percentage of the rate that the agency gets from the agency.

The first duty of recruitment consultants or agents is to maximise the returns for themselves and for their agencies. This is often to the detriment of contractors.As there is usually no set percentage of what the client will pay that should go to contractors and what should go to the agency, the agency will try and take as big a percentage as they can.

Contractors, especially new contractors, often find out that the agency is taking 50% or more of everything that they earn.Agents work on commission – so the less the contractor gets the better for them. Indeed, agents work on ascending scales of commission. In other words, if they hit certain targets then they might get 10% of what the agency gets. If they hit higher targets then they may make 20% or 30% or even 50% of what the agency gets.

Therefore it is in their interests to take as much as they can of what the client is paying and to leave the contractor with as little as possible of what the client will pay.Of course, more experienced contractors will be wise to this. However, agents, who are doing this kind of thing on a daily basis, are better attuned to this ‘game’ than the contractors, who only negotiate every few months at the most.

Most contractors make the mistake of looking at recruitment consultants as ‘their agents’ and let the agency tell contractors what their rate is going to be especially in their first few contracts. However, once they realise that the agency is a competitor for the money that the client will pay then their attitude changes and the contractor tries to dictate more the amount of money that goes to them from the client rather than the agency.

This advice may help new contractors to avoid this mistake and maximise their own returns from the work they do.

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