It's probably not much different than what most 'agencies' do.
The one I was with for the first 4 or 5 years of my 'career' charged the client double what I was paid - and whilst I understand they'd have to pay tax, NI and other business costs out of that, it seemed strange that they got a raise (for doing nothing) when I'd get one for adding value to the client (e.g. doing tasks outside of my job's remit).
In the end the client got fed up and gave them a 'reduce the overhead, or get lost' ultimatum. They decided to get lost. Most of us started working directly for the client on a rate somewhere between our old rate and the rate the client was paying the agency. Both parties were happy and the agency realised that they'd never put a 'poaching' clause into their contracts/terms, so the client told them to 'get lost' when an invoice came in for 30% of our estimated 1st year earnings as compensation for their loss of business.
Even now, I'll sometime accept a piece of work that I'm doing as a side project (usually off-site), that I know I haven't got the time for, but I'll either take the cash and get a similarly qualified colleague to do it, or direct the client to the colleague. A group of us have a small commission/referral scheme going so that whoever gets the referral buys dinner for the group.
However, in our case we don't hide the fact from the client/employer as there are instances when you need face-to-face meetings to discuss some of the points of the task, so it would be difficult to hide as we each produce the same output but with different methods. So I wouldn't be able to blag my way through my colleague's process, and vice versa.