Contractors of collapsed IT recruiter Veritas IT are being offered financial incentives to switch to another agency.

Simon Trippick, TAC Europe's managing director, told Recruiter: "We are going to assist these contractors financially. They are without the money they are owed, their contracts have been technically breached and they are wondering how their assignments will continue.

"We are offering them a signing-on bonus, of up to £1,000 and an advance against future earnings. This will enable them to pay their bills and get on with things."

Trippick admitted that he hoped "to pick up some extra contractors" from the move, but said that he also hoped it would help to improve the image of the industry.

However, Rob Eldridge, a partner at Berwin Leighton Paisner solicitors told Recruiter that there could be problems for contractors switching from one agency to another. "In theory, those running the company and wanting to sell it could write to the contractors and say 'Hang on, you have got a contract with us, you have to give notice. We are still willing to pay you'." Potentially this could lead to contractors being in breach of contract and at risk of being sued, he said.

But Kevin Barrow, head of the recruitment group at Blake Lapthorn Tarlo Lyons solicitors, said that given that non-payment is likely to be a fundamental breach of contract between a contractor and an agency, in such circumstances, it was very unlikely that an agency would be able "to hold onto" a contractor.

And even where a contractor had been paid, he said the regulation of staffing companies "very severely limited their [agencies] ability to restrict contractors' freedom" to contract through