Does my Agency still owe me money if the Client goes into Administration?

[joe500]

I was wondering if anyone could provide some advice on the situation I’m in. I was working for an I.T company through an agency in the usual way and the I.T company went into administration, they just took us into an office one day and told us that the company has gone into administration. I had just submitted an invoice for the previous month which I am still owed.

The administrators have been through the books and it looks like there isn’t enough money left to pay my invoice via administration.

My question is this; are the recruitment agency legally obliged to pay my invoice? In the contract there is a clause which states that they can delay payment but I’m assuming they still have to pay even if they don't get the funds as the obligation to pay me is with them and not the third party I.T company?

I’d be grateful for any help anyone can provide.

[malvolio]

This could be intresting...

If you're opted out then no, the agency are not obliged to pay you if they haven't been paid themselves. However, if you're opted in, they are. Your invoice is not part of the client's debts so any money arguments are between agency and client. The point is that 99% of us are opted in, intentionally or not, so if this goes to the wire it would good to test things in court.

However get get legal advice (if you're a PCG member give the legal helpline a call)

[Boo]

If you're opted out then no, the agency are not obliged to pay you if they haven't been paid themselves.

That is not true, it depends upon what the contract says.

However, if you're opted in, they are.

This is true, irrespective of what the contract says.

Boo2

[Wanderer]

Boo has hit the nail on the head there.

1. If you didn't sign your statutory rights away by signing the opt out then the bottom line is that your contract is with the agency, not the client and the law says that they are obliged to pay you even if they don't get paid. In this case, the client going into administration is the agency's problem, not yours.

2. If you did sign the opt out then it depends on what's written in your contract with the agency but generally agencies will sneak a clause in there to say that they won't pay you if the client hasn't paid them and they are perfectly entitled to do this in an opted out contract. Now is the time to read the fine print.

Even if you did sign the opt out, was it done before you were introduced or supplied to the client? If it wasn't then it may not be a legally valid opt out. Unfortunately, the legislation is poorly drafted on this point. Taking legal action (or engaging a collection agency) to force the agency to pay up may get results. Do a search for dunning on this forum for advice on the process to chase up an unpaid debt. As Malvolio says, the PCG can help out if you are a member.

Good luck!

[Safe Collections]

Wanderer & Boo are correct.

Looking for any freelance work folks?

[Incognito]

I’d be grateful for any help anyone can provide.

As the guys have said, any assistance is going to depend upon your circumstances. Firstly we need to know (a) have you opted out and (b) at what point did you opt out. The law around this area is quite complex and relatively untested.

There is a distinction between an introduction and a supply of a work seeker. For most contractors, the typical scenario would be covered under an introduction. However I'd need to see your contract before advising further.

Going on the assumption that you have only been introduced, the pertinent question is did you opt out prior to that introduction. The regulations don't make it easy in trying to understand what is meant by an introduction. Some people on here and the PCG seem to think it means the initial interview, however I don't think it's as clear cut as that. If you refer to the guidance on the regulations produced by the DTI (at p. 20), they talk about the practical definition of an introduction being day one of you actually starting your 'employment.' Whilst this is only regarding the interpretation of Regulation 20(5) and (6) I am pretty confident that a party would likely use this as part of their defence and this would likely be a key battleground in any proceedings. It is entirely plausible that a Court would construct Reg 20 in that way whilst constructing Reg 32 (the Opt Out) in such a way that the introduction is when you first meet the hirer, I.e. the interview.

Assuming you've signed an opt out form post interview, the Agency will likely argue that you are opted out. You have several options at this point. If the agency play hardball I'd suggest the following:

- Contact your MP, give a brief description of your situation and advise you don't believe you are opted out, but you are unsure due to the lack of definition of an 'introduction'. Ask them to write to the BIS (Vince Cable's department replacing BERR/DTI) on your behalf and ask them to clarify at what stage of the process does Regulation 32 refer to when referring to the term 'introduction' is it the interview or first day on the job.

- Additionally, make a complaint to the Employment Agency Standards Inspectorate state your case again, advise you are unsure about the definition of 'introduction' however you believe you have not opted out and wish to make a complaint about the agency. It's a criminal offence to breach any of the Regulations and the EAS can prosecute the agency. Whilst this is not directly relevant to you, if they are convicted it makes it (potentially) a lot easier for you to recover your money. You might have to deal with some low level individuals here, but if you make it clear you've requested your MP to clarify the situation with the BIS you should get some traction from both ends.

- At this point you would either sue the agency yourself, either in an action for an agreed sum or breach of contract. It is important to note here, your best option in a situation like this is typically not for breach of contract, but is an action for an agreed sum. It is usually easier to argue that you have performed a contract and are due money than arguing that the other side have caused you damage by not performing their side of the bargain.

Be advised though, all this is a lot of work. You may be better off letting someone else do the hard work for you. Just remember though, the more you do yourself the less it should cost you. If you got a solicitor to do all of the above it'd be a quite considerable sum. You could do the first two steps yourself and then leave it to a collection agency to pursue the last bit. There are a couple that post on this site and even one in this thread. I'm not aware of how they've performed so from a site point of view it'd be good to get a real life case study.

Before you do anything though, the very first question you should ask yourself should be is it worth pursuing. I realise you're out of pocket and it's bloody annoying, but it's pointless chasing the agency if they can't afford to pay you themselves. It would cost you a lot of time and money for a pretty hollow victory if all you achieved was forcing the agency to go bust with nothing being paid out to you. Again you could seek advice on this from a collection agency who may be better placed to advise you on the viability of the agency as a precursor to you actually pursuing any of the above.

At this point I must make clear, I have no affiliation with any collection agencies that have posted on this thread or on the site. I am not a lawyer however I am a law student. I advise you to seek independent legal advice no matter what you decide to do.

Apologies it is so long winded.

Incog.

[malvolio]

Wanderer & Boo are correct.

Looking for any freelance work folks?

Well OK, but I was not wrong in my intial response either. Every time such a question is asked, the usual suspects leap up with the "are you opted in" question, ignoring the detail that almost everyone is unless they both fully understand the rules and have acted at the appropriate time. And if you've signed a clause in your contract allowing witholding of payment - which you will have read carefully at the time, of course - you will know the answer to the question as posed.

The actual answer is simple. If they don't pay the OP on invoice, sue them for breach of contract and breach of the Regulations and see what happens. I somehow doubt that will come to pass, though.

As for "relatively untested", the law is totally untested: nobody has ever challenged it. The OP could easily be the first to do so, hence "this could be interesting".

[Wanderer]

the law is totally untested: nobody has ever challenged it. The OP could easily be the first to do so, hence "this could be interesting".

That's a very good point but the fatal flaw is that the agency will NEVER allow it to be tested in court because it's quite likely that they will lose the case and this will potentially create a precedent or case law.

So long as it's not tested in court or clarified in statute, it will remain as a grey area so Agencies can happily continue with their bully, bluff and bluster tactics then claim that it was an honest interpretation of the law if they get challenged. When a worker stands up and assets their rights with the threat of legal action they will quietly back down and offer a confidential settlement as a "goodwill gesture" and no admission of liability so the charade goes on...

[Incognito]

The actual answer is simple. If they don't pay the OP on invoice, sue them for breach of contract and breach of the Regulations and see what happens. I somehow doubt that will come to pass, though.

It's comments like that, that are vey dangerous on an Internet forum. It is no walk in the park sitting in front of a Judge arguing your own case. Especially not if the other party has instructed counsel. If the sum in dispute is greater than £5000, as the losing party you are potentially liable for both parties legal costs which can quite quickly amount to five figures. Your suck it and see analogy could easily result in the OP losing a lot of money, so again to the OP you really should consult with a legally qualified individual if you want the best answer.

[Incognito]

That's a very good point but the fatal flaw is that the agency will NEVER allow it to be tested in court because it's quite likely that they will lose the case and this will potentially create a precedent or case law.

A county court judgement is not binding.