Agent won't pay my invoice untill I agree to pre-conditions

[Energyman]

I have been carrying out works for a client through an agency for a couple of years without any problems. I am a Ltd Co. The contract beween the agency and the client came to an end but the client decided that they had to go to another service provider in future but wanted me to still carry out works for them through another agency which is what happened. The original agency now refuses to pay me my final invoice as they feel that they need compensation for the loss of trade and are looking to me to provide it. The client has paid the agency for services for the period being held but the agency are now insisting on various conditions that I should comply with before they will pay me. I have no signed contract or general T&Cs with the agency and these conditions now being applied are all new to me. Is this legal? Where do I stand with getting my money and how should I go about it.

Thanks for your help

[northernladuk]

Do a search for handcuff clauses... You will find lots on information on handcuff clauses and the affect of Opt In/Out on the restraint of trade.

Also read the Opt In/Out sticky will be very useful to you.

Read you contract very carefully and tell us exactly what the handcuff clause says.

These are very important as from what you have put in it's simple form it is quite possible you have breached a restriction of trade/handcuff clause in your contract. It normally says you cannot work for client/suppliers through another agent for 6-12 months or something along those lines. If you have switched agent then (lets take a simplistic view on this for now) you have indeed broken the clause and the agent is quite within his right to compensation. They can prove a loss due to your actions so are in a good position to get it back. This is most definately not the way but I guess they are hoping you will cave rather than face getting sued.

So... what can you do... A) be a bit more aware of your contracts, clauses and work situation would be a good start but that horse has bolted...

You need try rememeber if you opted in or out at the beginning which will tell us if the restriction in trade is enforceable. That is the key. If you got it wrong and it is enforceable you could be in a tricky situation.

I have to wonder what the clients hand in all this is. They should have known there would be fall out swapping agents and dealt with it surely?

What exactly are the conditions they are dictating. I can't imagine they are reasonable but can't begin to guess what they are.

So check your contract (you must have had one right at the beginning surely? A couple of years without contract and something like this was bound to happen). See what teh handcuff dictates

Check your Opt in/out status by reading up on it.

Then post some more details of your situation.

[SueEllen]

Energyman just because a contract isn't signed doesn't mean the terms aren't legally enforceable if you went to court.

One of the issues is that the agent paid you for the work you did for the client which indicates you accepted the terms in the contract they presented to you.

[Energyman]

There are a few odd things about this situation. The agency did not find me the appointment with the client, I did and the agency was selected as a vehicle to enable payment and for two years that is what they did. Accept my invoice, invoice the client with agreed markup and paid me when the client paid their invoice, Thats it, no more. Contract? what contract! I was never even shown a contract either to read or sign.

[northernladuk]

There are a few odd things about this situation. The agency did not find me the appointment with the client, I did and the agency was selected as a vehicle to enable payment and for two years that is what they did. Accept my invoice, invoice the client with agreed markup and paid me when the client paid their invoice, Thats it, no more.

This isn't uncommon. Most clients don't want to bother with the hassle of finding contracts and dealing with all the HR stuff, they just farm it out to agents to deal with. Also being a LTD billing a client you will often have to be on the Prefered Suppliers List. If you are not you can't go direct so no choice but to use an agent. Nothing unusual here..

Contract? what contract! I was never even shown a contract either to read or sign.

Ok, now it gets messy... and not in your favour... Does the fact you are a CONTRACTor not give you any hints on what should happen? How many paid pieces of work do you think B2B people and even B2C do without a contract or something detailing the very basics of how you get paid either.. Sorry to say I think you are wrong or might have forgotten. Even the slackest of agents would have something even to cover themselves. Ask the old agent for a copy of their contract. Saying you didn't see or sign one won't cut it I am afraid. Ignorance is not a defense. You run a business and must show some diligence doing so.

Without a contract I think you are on the backfoot a bit but still, agents don't want to mess about with court so you are gonna have to play hardball now. It sounds like it is gonna be a battle of wills and who will fold first but am no expert.

Again what are these pre-reqs they are imposing on you?

Do you know anything about IR35, 24 month rule and so on?

[Wanderer]

The original agency now refuses to pay me my final invoice as they feel that they need compensation for the loss of trade and are looking to me to provide it. The client has paid the agency for services for the period being held but the agency are now insisting on various conditions that I should comply with before they will pay me.

Do a search for "dunning" on this forum and you will find lots of advice about the process to follow. Make sure you get a contract next time - you leave yourself in a weaker position without one.

However, even without a contract you are still entitled to be paid so tell them to stop crying and pay up. They owe you money, the client has paid and now they have to pay you. Don't get into a negotiation with them or agree to any extra terms, these will absolutely not be in your best interests. Just tell them to pay your final invoice and remind them not to let the door smack their arse on the way out.

Don't forget to add the threat of interest and penalties. Even though you have no written contract with them then the implied payment terms are 30 days so don't let them bulltulip you about that either.

[SueEllen]

Without a contract I think you are on the backfoot a bit

Not neccessarily.

If Energyman can prove i.e. with emails that he met the client before the agent got involved then any restrain of trade clauses in the contract are very unlikely to be enforceable as Engergyman brought the business to the agent not the other way round.

The agent is probably withholding the money due to such a clause in the contract as an agent isn't going to remember after a couple of years how they got the business.

Anyway following Wanderer's advice and then threatening to go all the way to court will probably get the money out of the agent.

Oh Energyman if they hassle you about pre-conditions tell them politely to get stuffed.

[northernladuk]

Not neccessarily.
If Energyman can prove i.e. with emails that he met the client before the agent got involved then any restrain of trade clauses in the contract are very unlikely to be enforceable as Engergyman brought the business to the agent not the other way round.

The agent is probably withholding the money due to such a clause in the contract as an agent isn't going to remember after a couple of years how they got the business.

Anyway following Wanderer's advice and then threatening to go all the way to court will probably get the money out of the agent.

Oh Energyman if they hassle you about pre-conditions tell them politely to get stuffed.

Yes neccessarily. He isn't stuffed by any means but certainly on the back foot as he has to go round and prove everything and argue everything else. With a contract and proper process he just points at the relevant part of the document. Wanderer doesn't make the point strongly enough, contracting, particularly for two years without a contract is just stupid. It proves you are not a proper business IMO and for me should be part of the business test.

I am assuming the OP is inside IR35 as well, two years, no contract same client.. if that doesn't sound like the basis of a disguised employee I don't know what does. Will need some pretty go defense to prove otherwise IMO.

[BlasterBates]

Unless you unwittingly signed something with a handcluff clause in it, then this is a straightforward process of chasing the invoice and takiing them to court if they don't pay.

It may well be that the agency is just following through a standard procedure, so you need to send a letter first explaining there is no handcluff clause, so they have no right to withhold payment. You could try telephoning them to clarify that you don't have a contract and they are just pay rolling, that might sort it out. They may just be trying it on or it's a cock-up, either way you have to make it clear that there isn't a contract with a handcuff clause.

[northernladuk]

Unless you unwittingly signed something with a handcluff clause in it, then this is a straightforward process of chasing the invoice and takiing them to court if they don't pay.

It may well be that the agency is just following through a standard procedure, so you need to send a letter first explaining there is no handcluff clause, so they have no right to withhold payment. You could try telephoning them to clarify that you don't have a contract and they are just pay rolling, that might sort it out. They may just be trying it on or it's a cock-up, either way you have to make it clear that there isn't a contract with a handcuff clause.

Is this really true? There has to be some implied contract surely? Just because the OP hasn't signed a contract it doesn't mean he has absolutely no terms surely? By the same token the agent could pay him in 90 days or put any other blockers in the way using the same argument?

I for one do not believe that the OP hasn't seen a contract or agreed to something. The fact he has such a slap dash approach to his contracting attitude makes me think he hasn't done something properly without understanding.