Is it legal for the company to retrospectively reduce my day rate?

[BrilloPad]

It is illegal. You should sue.

[NotAllThere]

Started a contract just over two weeks ago. All papers signed etc, with day rate clearly stated. Yesterday, the agency has called and followed up by email, saying that rates are being reduced w.e.f. 01 April and I have to accept (or not) by tomorrow. First, is this legal? Second, if it is, what should I look for in the contract that makes it clear that this can be done? If not, what do you propose I do? I have already declined to accept the rate cut, by the way. Be gentle - this is my first post!! Thanks.

You've not accepted the retrospective rate cut. The agency now has a choice. They can cough up and keep you on, or cough up and terminate. What they cannot do, without your agreement (unless the contract says otherwise, which is unlikely) is pay you at the lower rate for work you've already done.

[ruasonid]

Have just been through something similar and the first thing the agency did was contact me with an explanation. Interesting discussions followed and the reasons (not performance) became very clear, after which a compromise was reached. If your agency is not as open with you they possibly have made a mistake or are trying their luck. Were there any discussions/negotiations around rate before you started?

[northernladyuk]

Accept the cut with good grace. Find another contract. Then tell your current client that you're increasing your rate or terminating the contract.

[northernladuk]

How's this going? Any updates?

[oliverson]

Started a contract just over two weeks ago. All papers signed etc, with day rate clearly stated. Yesterday, the agency has called and followed up by email, saying that rates are being reduced w.e.f. 01 April and I have to accept (or not) by tomorrow. First, is this legal? Second, if it is, what should I look for in the contract that makes it clear that this can be done? If not, what do you propose I do? I have already declined to accept the rate cut, by the way. Be gentle - this is my first post!! Thanks.

Which company is this? If you can't say (or hint), is it London finance?

[SussexSeagull]

Retrospective rate cut for time already worked would be a red line for me.

[BlasterBates]

No they can't reduce your rate retrospectively without your agreement, but if you don't agree they'll terminate you, and there isn't a lot you can do about it.

Do bear in mind, that the market looks pretty cr*p at the moment, if you walk you won't be teaching them a lesson, and you won't be seen as a "Clint Eastwood" figure not to be messed with, decisions like this are made by accountants who have no contact with contractors and don't care, i.e. don't make an emotional decision however tempting that may be.

If you are in demand and you think you can easily get another contract at a higher rate, then refuse, if you think you'll be spending time on the bench and you won't get back lost earnings then accept and look around. You could try a middle way by demanding you are paid at the original rate for the two weeks. That sounds like a position that is defensible and worth a try.

[centurian]

They're trying to cut the total cost of the contract.

Imagine if there wasn't a "retrospective" element to it, but they issued a "take it or leave it" rate cut from today onwards - but a much more swingeing cut to the rate.

No-one would be saying that its retrospective, but the end effect would be the same.

So work out how much the bigger rate cut would have been if applied prospectively - and judge the rate cut according to that figure. Would you have accepted that figure ? If so, don't get caught up in the concept of it being retrospective.


Any party that has an exit clause to any contract can request that the contract is completely negotiated according to whatever terms they want. And if the other party doesn't agree, they can follow through on their threat to invoke the exit terms.

What they cannot do - is unilaterally decide to apply any new terms - without paying up under the existing terms - up to and including any exit costs.

In short, if you agree to it - they can do whatever they want. If you don't agree, they must abide by the terms of the contract if they choose to terminate it.