Reply to: Can I chase my umbrella companies' debt for them?

[psychocandy]

Must admit I always thought different but maybe Im wrong. I always thought:-

1) OK contractor is in breach by leaving so agency is well withink their rights to claim compensation which is based just on their losses.
2) If contractor has done the work they are owed the money.
3) Agency although very likely to pay silly buggers is not liable to claim compensation for (1) from (2). Pay up (2) and chase (1) in the courts if see fit.

Although Safe Collections seem to be saying that (1) might screw up (2).

[ContrataxLtd]

You are right in your assumptions Martin aside from the fact that we work on the Living Wage rather than NMW so not to risk falling foul of the NMW legislation. We have to pay a salary to our employees once a month regardless of whether or not we have received funds from the agency; once funds are received the worker is paid a profit related bonus. Consequently it's in our interest to have a robust credit control process in place to recover monies owed from the agencies/clients that we work with. Any legal challenge from the employee would come via an employment tribunal and any issues of non-payment with the agency would then be dealt with direct

Thanks for the confirmation Lisa and an interesting point about paying the Living Wage as opposed to NMW.

I suppose it all comes down to the quality of the Umbrella company in the end, I'm guessing there are some out there that aren't run 'properly' and only pay upon receipt of funds from the agency.

[LisaContractorUmbrella]

You are right in your assumptions Martin aside from the fact that we work on the Living Wage rather than NMW so not to risk falling foul of the NMW legislation. We have to pay a salary to our employees once a month regardless of whether or not we have received funds from the agency; once funds are received the worker is paid a profit related bonus. Consequently it's in our interest to have a robust credit control process in place to recover monies owed from the agencies/clients that we work with. Any legal challenge from the employee would come via an employment tribunal and any issues of non-payment with the agency would then be dealt with direct

[ContrataxLtd]

Presumably though the court would need to decide on what basis "discretionary" is fair as a term of employment. Discretionary on the basis of hours worked (supported by approved timesheet) or discretionary on the basis of the agency having settled an invoice?

I'm sure Lisa can correct me if I'm wrong here...........

But surely under the contract of employment the worker would have been employed at NMW and the Umbrella is legally obliged to pay this to the worker for all hours worked regardless of whether or not the Umbrella company had been paid by the agency. If they hadn't then the worker could have made a claim against the Umbrella for this (employment tribunal or small claims court etc.).

The matter of the unpaid invoice is then between Umbrella company and Agency and if it never gets paid the worker doesn't get anything further and has no right under their employment contract to anything further. If it does eventually get paid the Umbrella company suddenly has some more profit that it can decide to pay out as a bonus to the worker.

I can't imagine that an Umbrella company would have a bonus system in place based on hours worked because that would effectively be the workers basic pay then and leave the Umbrella company open to having to pay out much higher wages when not being paid by the agency.

Personally I don't think that any bonus system in an employment contract, other than a guaranteed bonus for meeting clearly defined targets, can be relied upon as something you should expect to receive because there is always that discretionary element to the bonus.

Martin
Contratax Ltd

[Contreras]

I'm guessing here, but it might not be classed as salary - the contract may specify it as a discretionary bonus. Otherwise, the umbrella would have to keep paying you at that salary level regardless of the contract value.

Presumably though the court would need to decide on what basis "discretionary" is fair as a term of employment. Discretionary on the basis of hours worked (supported by approved timesheet) or discretionary on the basis of the agency having settled an invoice?

[TheFaQQer]

Sorry, no idea how the employee relationship works with umbrella's - always been LtdCo myself. But are you not an employee of the umbrella. If so, why use county court - wouldn't this be an employment tribunal, given it's unpaid salary.

I'm guessing here, but it might not be classed as salary - the contract may specify it as a discretionary bonus. Otherwise, the umbrella would have to keep paying you at that salary level regardless of the contract value.

[SueEllen]

Why does this matter - pretty sure they can't counter claim against an employment tribunal. There would be no netting off against claims. They would first have to pay your outstanding amount (it's an open and shut case), then separately sue you for breach of contract in the county court to get the money back.

You can bring a counter claim in an employment tribunal but it's very limited so never done. More info here.

This bit is interesting -

As an example, employers could seek to counterclaim for the additional costs incurred where an employee has not provided sufficient notice, or any other losses sustained as a result. This could include the difference in the cost of a replacement for the notice period or even for loss of profits flowing from the inadequate notice provided.

The main issue is the agency hasn't shown the amount they have lost so I would chase them until they did.

Edited to say: The OP is out of time for an employment tribunal so he would have to go to the County Court.

[Contreras]

I do wonder what an employment tribunal would have to say if the employer's reasoning is that they are not to obliged pay the employee for hours worked until their client has paid an invoice.

The employer has to respond to the court within a certain period of the case being filed. If they fail to do this, or in their response admit that the salary is owed, then the Judge can award a default judgement without it going to a hearing.

[centurian]

Sorry, no idea how the employee relationship works with umbrella's - always been LtdCo myself. But are you not an employee of the umbrella. If so, why use county court - wouldn't this be an employment tribunal, given it's unpaid salary.

Why does this matter - pretty sure they can't counter claim against an employment tribunal. There would be no netting off against claims. They would first have to pay your outstanding amount (it's an open and shut case), then separately sue you for breach of contract in the county court to get the money back.

Saw this happen with a friend who fired an employee for gross misconduct - he fought tooth and nail to avoid paying them another penny (last pay slip, holiday pay etc) - employee took him to an industrial tribunal - the judge agreed it was gross misconduct, but told him to pay up outstanding amounts immediately - and file a separate claim in county court for damages if he wanted the money back.

This was a few years ago, so maybe laws have changed.

EDIT:

http://etclaims.co.uk/2012/02/when-c...-counterclaim/

They can only bring a counterclaim if you are claiming breach of contract. Don't know whether that applies to unpaid salary - whether it's a statutory tort or not

[northernladuk]

If the contractor didn't opt out then the agency regulations say they must pay the contractor for the time worked.

Now that doesn't mean that the agency can't attempt to recover their "losses" from the contractor but it does mean that they can't arbitrarily withhold payment.

An still not getting it. The contract says he will get paid if he has a signed timesheet so agent can't withhold payment regardless of opt in? The opt in only helps the contractor by making the agent pay if the client hasn't or there is no timesheet. Op has met his contractual obligation to do work and get a signed timesheet. The agent is then contractually obliged to pay.

[Wanderer]

Actually thinking about wouldn't the opt in/out status be a red herring here? There is no dispute time sheets and money owed? The agent is just trying to be smart as he thinks that payment will compensate him for loss of income for the OP breaching notice period. The agent is in the wrong regardless of status.

If the contractor didn't opt out then the agency regulations say they must pay the contractor for the time worked.

Now that doesn't mean that the agency can't attempt to recover their "losses" from the contractor but it does mean that they can't arbitrarily withhold payment.

[Safe Collections]

We don't know how much money the claim for the OP has is for so it could be a small claim, where no solicitors are needed.

Someone previously on here walked out on a contract and the agency listed the costs which were less than what the contractor was owed, so the agency eventually paid the difference.

In any legal dispute you need to act reasonably. So if the agency counter-sues but doesn't explain their costs they aren't acting reasonably.

You are of course, absolutely correct in your comments the OP could be owed more than the agency claim and they may well roll over, but we doubt it.

It may well be worth a punt as far as trying to negotiate or threaten further action if unpaid, but we certainly would not recommend spending any serious money in the quest for payment, as in our experience that is one investment that is unlikely to generate a return.

[SueEllen]

We would echo Lisa's points. We can virtually guarantee this will be defended on the basis that the agent incurred a loss equal to or greater than the ops. Once a counterclaim is filed it is virtually impossible to extricate yourself from the claim and it will headed for a hearing with a judge, with both sides having to pay their own considerable legal costs (generally in the region of £150-200 an hour and up).

The fact the OP left the contract prior to the end date when no notice clause exists has, in our opinion, hamstrung any serious possibility of recovering what is outstanding.

We don't know how much money the claim for the OP has is for so it could be a small claim, where no solicitors are needed.

Someone previously on here walked out on a contract and the agency listed the costs which were less than what the contractor was owed, so the agency eventually paid the difference.

In any legal dispute you need to act reasonably. So if the agency counter-sues but doesn't explain their costs they aren't acting reasonably.

[kal]

Schoolboy error here...in future say nothing.
1. Go on "holiday" wait till last payment hits account then don't go back.
2. Put agents phone number on auto reject.

A great way to run your business! a more proactive approach is to perhaps read the contract you are signing with a view to understanding what you are getting yourself into...

[Safe Collections]

IMHO this is a bit of a tricky one. You could argue, if your final work was signed off and paid for by the client, then you are entitled to that money regardless. However, the agency could argue that you were in breach of contract as you were contracted to work for a certain period and failed to do so. If you were to take the matter to court, you could be faced with a counter suit from the agency for their loss of earnings from the contract. I could imagine that the Judge could take the position that the two cases would pretty much cancel each other out in which case you would have both wasted your time.

Your umbrella company is your employer and therefore they should chase the debt for you. If this were me I think I would try to mediate and reach a compromise with the agency so that at least you could end up with something

We would echo Lisa's points. We can virtually guarantee this will be defended on the basis that the agent incurred a loss equal to or greater than the ops. Once a counterclaim is filed it is virtually impossible to extricate yourself from the claim and it will headed for a hearing with a judge, with both sides having to pay their own considerable legal costs (generally in the region of £150-200 an hour and up).

The fact the OP left the contract prior to the end date when no notice clause exists has, in our opinion, hamstrung any serious possibility of recovering what is outstanding.