End client gone into administration, recruiter not paying.

[scottwio]

Recently I have been working on a project for a client through a recruitment company. My contract is with the recruitment company who has then sub contracted me to the end client. Last month the end client went into administration. The client went into administration at the start of October, the recruitment company is now refusing to pay me for the work I did during September as they will not get paid by the end client because the end client went into administration.

The Requirement company claims they have the right to do this because I the contractor opted out of "The Conduct of Employment Agencies and Employment Businesses Regulations 2003" and our contract states the below under the section termination:

"The Company reserves the right to terminate a Project with immediate effect with out liability in the event of any of the Client entering into liquidation/becoming insolvent, dissolved or subject to a winding up petition or administration order, or having its credit rating revoked or materially reduced."

Can they refuse to pay me for work I completed and invoiced for prior to the end client going into administration? The section of terminations seems to be referring to costs that may be occurred from the sudden termination of the project. Any help would be appreciated, I know I should probably contact a lawyer but wanted to get a feel for if anyone had heard of cases like this before or know where a contractor stands in this situation?

[mudskipper]

Recently I have been working on a project for a client through a recruitment company. My contract is with the recruitment company who has then sub contracted me to the end client. Last month the end client went into administration. The client went into administration at the start of October, the recruitment company is now refusing to pay me for the work I did during September as they will not get paid by the end client because the end client went into administration.

The Requirement company claims they have the right to do this because I the contractor opted out of "The Conduct of Employment Agencies and Employment Businesses Regulations 2003" and our contract states the below under the section termination:

"The Company reserves the right to terminate a Project with immediate effect with out liability in the event of any of the Client entering into liquidation/becoming insolvent, dissolved or subject to a winding up petition or administration order, or having its credit rating revoked or materially reduced."

Can they refuse to pay me for work I completed and invoiced for prior to the end client going into administration? The section of terminations seems to be referring to costs that may be occurred from the sudden termination of the project. Any help would be appreciated, I know I should probably contact a lawyer but wanted to get a feel for if anyone had heard of cases like this before or know where a contractor stands in this situation?

Are you an IPSE member? If so, give the legal helpline a ring tomorrow and they should be able to advise you.

If the contract terms do indeed mean they can not pay you, it may be important to establish whether your opt out is valid. For an opt out to be valid, you need to have opted out in writing before being introduced to the client (i.e. before interview). AFAIK, this has never been challenged in court, but in your case it could be important.

Good luck.

[TheCyclingProgrammer]

First things first - did you actually opt out and is the opt out valid?

[northernladuk]

Read your contract carefully. Is there anything in there about you not getting paid if the agent doesn't?

[SimonMac]

Ask for a copy of your opt-out, if they cannot produce this then you will have to go down the legal route I am afraid, have a word with Safe Collections on how to proceed with dunning (you will probably have to show you have tried to recoup the fee's yourself before the legalities begin)

[NotAllThere]

..."The Company reserves the right to terminate a Project with immediate effect with out liability in the event of any of the Client entering into liquidation/becoming insolvent, dissolved or subject to a winding up petition or administration order, or having its credit rating revoked or materially reduced."...

I'm not a lawyer, but that reads to me that if the client becomes insolvent, the agency can end your contract without notice, and without having to pay you any compensation or notice period for the immediate termination. It does not mean that they don't have to pay you for work already invoiced or work you've done (but not yet invoiced) up until the date the agency notified you of termination. Possibly (and this is where the opt out/opt in may be relevat), they don't have to pay you for work not signed off by a timesheet.

I.e. you should invoice them for the work you did up until they said "stop", and you should chase those invoices.

The Late Payment of Commercial Debts Regulations 2013 - Pay on Time gives advice on how to dun, and how to proceed to court. In my view the best approach is simply to say "I do not accept that our contract states that in the event of liquidation you do not have to pay me for work already done. Here are my invoices, please pay them according to our agreed terms". You may wish to consult a contract lawyer before responding, however.

It may be that the agency, if it's small, really cannot pay you. In that case, it's best to come to a settlement.

[BlasterBates]

Agree with NotAllThere chase up invoices for work done. Anything beyond that will become protacted and difficult. I wouldn't bother.

Trying to use "employment regulations" to get your money when you're a business whilst theoretically possible sounds like a long shot. The regulations do not apply if you're not under supervision and control of the Client, and I would expect that to be explicitly stated in the contract otherwise it's your word against theirs.

[SueEllen]

Agree with NotAllThere chase up invoices for work done. Anything beyond that will become protacted and difficult. I wouldn't bother.

Trying to use "employment regulations" to get your money when you're a business whilst theoretically possible sounds like a long shot. The regulations do not apply if you're not under supervision and control of the Client, and I would expect that to be explicitly stated in the contract otherwise it's your word against theirs.

The regulations are a mess and if you had a lawyer they could easily argue the opposite.

Personally I wouldn't use the regulations at all and use the contract.

OP if the contract doesn't say you only get paid when the client pays the agency then it is a case of chasing the agency for the payments. First nicely but mentioning you will take enforcement action which may be legal if they don't pay up, then contacting someone like Safe Collections if they don't.

Whatever you do don't take legal action to wind the agency up as you will never see the money and the directors of the agency will just start up a new agency.

[northernladuk]

Whatever you do don't take legal action to wind the agency up as you will never see the money and the directors of the agency will just start up a new agency.

I highly doubt an agency is going to fold just because of a couple of missed payments to a contractor. Bit extreme that isn't it?

[northernladyuk]

Do you have a signed timesheet? If so, invoice and start dunning - the advice to speak to Safe Collections is good advice. If not, does your contract say anything about the presence or absence of a signed timesheet?