Reply to: Is it legal for the company to retrospectively reduce my day rate?

[centurian]

They're trying to cut the total cost of the contract.

Imagine if there wasn't a "retrospective" element to it, but they issued a "take it or leave it" rate cut from today onwards - but a much more swingeing cut to the rate.

No-one would be saying that its retrospective, but the end effect would be the same.

So work out how much the bigger rate cut would have been if applied prospectively - and judge the rate cut according to that figure. Would you have accepted that figure ? If so, don't get caught up in the concept of it being retrospective.


Any party that has an exit clause to any contract can request that the contract is completely negotiated according to whatever terms they want. And if the other party doesn't agree, they can follow through on their threat to invoke the exit terms.

What they cannot do - is unilaterally decide to apply any new terms - without paying up under the existing terms - up to and including any exit costs.

In short, if you agree to it - they can do whatever they want. If you don't agree, they must abide by the terms of the contract if they choose to terminate it.

[BlasterBates]

No they can't reduce your rate retrospectively without your agreement, but if you don't agree they'll terminate you, and there isn't a lot you can do about it.

Do bear in mind, that the market looks pretty cr*p at the moment, if you walk you won't be teaching them a lesson, and you won't be seen as a "Clint Eastwood" figure not to be messed with, decisions like this are made by accountants who have no contact with contractors and don't care, i.e. don't make an emotional decision however tempting that may be.

If you are in demand and you think you can easily get another contract at a higher rate, then refuse, if you think you'll be spending time on the bench and you won't get back lost earnings then accept and look around. You could try a middle way by demanding you are paid at the original rate for the two weeks. That sounds like a position that is defensible and worth a try.

[SussexSeagull]

Retrospective rate cut for time already worked would be a red line for me.

[oliverson]

Started a contract just over two weeks ago. All papers signed etc, with day rate clearly stated. Yesterday, the agency has called and followed up by email, saying that rates are being reduced w.e.f. 01 April and I have to accept (or not) by tomorrow. First, is this legal? Second, if it is, what should I look for in the contract that makes it clear that this can be done? If not, what do you propose I do? I have already declined to accept the rate cut, by the way. Be gentle - this is my first post!! Thanks.

Which company is this? If you can't say (or hint), is it London finance?

[northernladuk]

How's this going? Any updates?

[northernladyuk]

Accept the cut with good grace. Find another contract. Then tell your current client that you're increasing your rate or terminating the contract.

[ruasonid]

Have just been through something similar and the first thing the agency did was contact me with an explanation. Interesting discussions followed and the reasons (not performance) became very clear, after which a compromise was reached. If your agency is not as open with you they possibly have made a mistake or are trying their luck. Were there any discussions/negotiations around rate before you started?

[NotAllThere]

Started a contract just over two weeks ago. All papers signed etc, with day rate clearly stated. Yesterday, the agency has called and followed up by email, saying that rates are being reduced w.e.f. 01 April and I have to accept (or not) by tomorrow. First, is this legal? Second, if it is, what should I look for in the contract that makes it clear that this can be done? If not, what do you propose I do? I have already declined to accept the rate cut, by the way. Be gentle - this is my first post!! Thanks.

You've not accepted the retrospective rate cut. The agency now has a choice. They can cough up and keep you on, or cough up and terminate. What they cannot do, without your agreement (unless the contract says otherwise, which is unlikely) is pay you at the lower rate for work you've already done.

[BrilloPad]

It is illegal. You should sue.

[Maslins]

However, I think the OP is talking about one party threatening to invoke a legitimate termination clause unless the other party agrees to a variation, which is perfectly fine (insofar as the termination clause is fine).

Yup, that doesn't seem too unreasonable. Ie we agreed X, I now realise it's not working out for me, so we either need it to be Y or I'm going to have to terminate as soon as the contract says I can. The contractor can then either suck it up, or leave, but if they do leave they do get the original X for the period they did work.

Seems very different to we agreed X, you've done your bit, and some way into the contract I've now changed my mind, and you're only going to get Y for the work you've already done going right back to the start of the contract.

[jamesbrown]

I'm no lawyer, but surely the retrospective bit at least isn't legal?

Unless the contract says that they're going to pay you in apples but, at their discretion, they may decide to pay you in any other kind of fruit, and there is evidence that both parties understood this (because a judge would be pretty skeptical ) then, no, you can't unilaterally enforce some terms that weren't agreed

However, I think the OP is talking about one party threatening to invoke a legitimate termination clause unless the other party agrees to a variation, which is perfectly fine (insofar as the termination clause is fine).

[Scruff]

If you only started the contract 2 weeks ago, then the variation going back to 1 April can't be affected, since it pre-dates the actual date of your contract? Check the actual original contract dates (either in the contract itself, or, on the "Schedule").

Name & Shame the agency?

Souns like a bit of a balls-up to me.

[Maslins]

I'm no lawyer, but surely the retrospective bit at least isn't legal?

[Scruff]

Thanks. So it really isn't a legal thing at all - just a negotiation. If I refuse, and they decide to give me my one week's notice though, they'll need to pay me the day rate as per the contract won't they.

Luckily, I think I am providing something critical, so we'll see what happens. I'll let you know.

Thanks again for replying.

1. They are only obliged to pay you for work actually performed. Usually this is backed by an approved timesheet.
2. If you continue to work after the date of the effective rate cut, without their agreement, where they have confirmed that the rate cut has not taken effect, then you will have accepted the rate cut by "tacit acceptance". You will then be paid according to the new rate.
3. You need to check the "variation" clause in your contract, as to the method of offer and acceptance of any variation(s). Usually this specifies "accepted in writing".

[northernladuk]

You working in the finance sector? For a bank? It's to be expected if you are I am afraid.

http://www.egos.co.uk/contract-breakers.htm