Reducing the day rates

**northernladuk** · 10 October 2018, 16:29

Originally posted by ash007 View Post

Hi,

I have been contracting with a client through an agency for the last 3 years. Though I actually work for the clients client with whom I have very good relations.

Do you understand IR35? Not a lot to go on but I'd say if you don't you could have some issues with that setup.

Around in June I agreed to a 5% cut in day rates.

Did you qualify this? The agency just rocks up and says 5% cut. Fair enough as your contract is with them but did you find out if the client initiated it? Has the client cut the rate or the agent? Very important detail.

I asked for a new contract for that to be in effect but they never got back to me even after repeatedly asking for the new contract. I then billed invoice like normal based on the old rates from the existing contract and got paid. Now the agency has told they cant pay me for last month unless I raise a credit note for the difference. Apparently the client also paid them and are now asking them to raise credit notes for the difference from June.

You agreed the cut. You've made a new contract either verbally or via email. Why did you go against what you agreed? Of course it's gone wrong.

It doesn't need to be on paper to be a contract. It's pretty poor of the agency not to supply you a new contract yes. But ignoring what you agreed and picking the old rate wasn't the correct thing to do.

They don't have to issue you with a new contract. It could just be a change to the payment terms.

Another very important detail you've missed. Did they do this mid contract or at renewal time? Very important distinction so we need to know.

And... have you been getting contracts every time you've been renewed in the past and it's just this time you are not getting a contract? Or have you just been carrying on even though the old contract expired?

Am I correct in saying that as they haven't issued a new contract the new rates are not in effect and they cant back track?

No you are not.

I have already finished my accounts and even payed VAT based on the old rates. They have now stopped any further payments till I raise a credit note. Please advice.

Not a problem. Your accountant will help you sort it out. It's not complex.

and it's ADVISE!!!!!! Not often we get it this way wrong but still annoying.

**TheCyclingProgrammer** · 10 October 2018, 16:47

I don't agree with NLUK in the slightest.

It sounds to me like you agreed to the rate cut in principle but only on receipt of an updated contract to reflect this change, which you never received. What did you actually say to them?

Compounding this error on the agency's part, you continued to invoice them at the old rate which they have received, processed and paid without raising a query. This, on top of not supplying the requested contract change, would to me imply an implicit acceptance of the original rate. The time for them to query this was after the first invoice you sent at the old rate, not several months down the line having already paid you.

On that basis I would be contacting them telling them that as they never sent through the updated contract as requested and have continued to pay you at the old rate that you will not be retrospectively discounting your services and that you expect payment in full for any outstanding invoices. If they refuse, then following the standard procedure, letter before action etc.

TLDR; the agency have cocked up here, have probably been paid the reduced rate by the client and have realised their error. Tough tulip.

**LondonManc** · 10 October 2018, 17:05

If you haven't had a contract update, you're still entitled to your old rate because that is what you are contracted at.

Speak to your client asap.

**northernladuk** · 10 October 2018, 17:18

Originally posted by LondonManc View Post

If you haven't had a contract update, you're still entitled to your old rate because that is what you are contracted at.

Speak to your client asap.

Unless he's agreed otherwise. Which he did.

**northernladuk** · 10 October 2018, 17:21

Originally posted by TheCyclingProgrammer View Post

I don't agree with NLUK in the slightest.

It sounds to me like you agreed to the rate cut in principle but only on receipt of an updated contract to reflect this change, which you never received. What did you actually say to them?.

With so little information it could easily be either way. But I'd say if he's been offered the cut and sent a reply back saying I agree and then went on site then the new contract is in place.

His implicit acceptance by turning up on site came came before the agency accepting an invoice at the old rate.
And its not even implicit. It was confirmed by some medium, verbal or email.

**northernladuk** · 10 October 2018, 17:30

But all this is another lesson about not going on site until a contract has been produced and signed.

**WordIsBond** · 10 October 2018, 21:02

Hard to answer without knowing more.

1. Did you agree to the rate cut in writing?
2. If so, did your written agreement to the rate cut specifically state that it was conditional on getting a new contract?
3. If your agreement was verbal, rather than in writing, did you also specifically state at the time that it was conditional on getting a new contract?

NLUK said:

You agreed the cut. You've made a new contract either verbally or via email. Why did you go against what you agreed? Of course it's gone wrong.

If his agreement was conditional on getting a new contract, then they haven't fulfilled their end (the new contract) so he isn't bound to keep his end (the rate cut). If his agreement was not specifically conditional on a new contract, then he might be bound.

I also don't know why you've asked OP about whether the client payment to the agent has been cut. That's irrelevant to OP, and he may not know. OP's contract is with the agent, not the end client.

The obvious solution is to get on the phone with the agent and say, 'You know, I said I'd work for that rate from June if I got a new contract. You've never given me the contract. If you give me the new contract now I'm willing to backdate the rate cut to June, and this whole problem goes away. If not, well, the only contract we have is the one that is at the rate I've been billing you. Why won't you just send me the contract, what's the problem here?'

**LondonManc** · 11 October 2018, 06:56

Originally posted by northernladuk View Post

Unless he's agreed otherwise. Which he did.

Any evidence?

**northernladuk** · 11 October 2018, 07:21

Originally posted by LondonManc View Post

Any evidence?

Unless he's done it via ESP you've got to assume there is surely.

Reducing the day rates