Reply to: Working without a contract

[tarbera]

are Company A and B lovers ??

Oh right yeah



What you say is fair (moron) but Company A has been friends for a number of years which has complicated the situation.

Next quarter for the VAT due and worst case ~1.5k. Its not that the outstanding amounts aren't of concern or that they wont be chased, its that if it comes to a bun fight, it might be better to simply move on, obviously having learned a few lessons the hard-way rather than to stir a hornets nest!

if so that would explain a lot.?

[DaveHills]

John should really thank us, the advice is for him

Oh right yeah

Simple way to stop the stress is to leave, then, if you are prepared to write off the £20k.

The more I read about "John", the more I think "what a f***ing moron". Not only did "he" work without a contract, he then let the amount owed hit £20k, and is now willing just to let it go because he doesn't want to chase it.

Has "he" invoiced for the amounts, and if so, has "he" accounted for the invoices properly in hi accounts? Has he already paid VAT on the unpaid invoices?

What you say is fair (moron) but Company A has been friends for a number of years which has complicated the situation.

Next quarter for the VAT due and worst case ~1.5k. Its not that the outstanding amounts aren't of concern or that they wont be chased, its that if it comes to a bun fight, it might be better to simply move on, obviously having learned a few lessons the hard-way rather than to stir a hornets nest!

[DirtyDog]

Down tools right now and say you will resume when later today or tomorrow when the £20K hits tour bank account when finished you have no leverage. you will be back on here asking how you can get your 20K back,

No he won't - John is going to write it off:

Firstly, John has received 55k thus far so has been paid to end Nov. There is a real product although the software is incomplete. Due to the level of stress being so high now, its not a concern if any more is received and he wont chase it. He just wants to move on with as little collateral damage as possible and NEVER repeat these mistakes again!!!

John is either (a) very cash rich; or (b) a buffoon to decide now that getting £20k isn't worth asking for.

[tarbera]

Best advice

I have a friend whose name is John who has, through his own limited company, been working for a company (company A) without a contract (company A is another 1 man band). The work for Company A is for a contract they have to deliver to Company B. This has now been going on for 10 months.

John has been working very hard (long days, often 7 days per week, for the last 10 months) and is shattered but is trying to deliver enough so that Company A can meet their contractual obligations, which is much overdue.

Company A has said to company B that if the work overruns the next deadline then any further work will be completed free-of-charge. John reluctantly agreed as he is close to completion and under pressure. John is owed in the region of 20k but is trying to draw this to a amicable conclusion for professionalism, however, has the opportunity for a contract back with another company (C).

While John realizes this situation has got out of control, he doesn't intend to leave Company A in trouble, he does have to think about his own future and has a very good reputation at company C where he wants to work. His plan would therefore be; if the work overruns to finish it off outside of the work for Company C which is not ideal but what he feels is right. Otherwise he stands to loose a good contract and keep chasing a cluster-fk of a project.

For the payments that he has received, John has invoiced for design work by the hour to Company A.

So with that can of worms open....

Could John and his company be held liable for breech of contract between Company A and Company B?

Down tools right now and say you will resume when later today or tomorrow when the £20K hits tour bank account when finished you have no leverage. you will be back on here asking how you can get your 20K back,

[DirtyDog]

Firstly, John has received 55k thus far so has been paid to end Nov. There is a real product although the software is incomplete. Due to the level of stress being so high now, its not a concern if any more is received and he wont chase it. He just wants to move on with as little collateral damage as possible and NEVER repeat these mistakes again!!!

Simple way to stop the stress is to leave, then, if you are prepared to write off the £20k.

The more I read about "John", the more I think "what a f***ing moron". Not only did "he" work without a contract, he then let the amount owed hit £20k, and is now willing just to let it go because he doesn't want to chase it.

Has "he" invoiced for the amounts, and if so, has "he" accounted for the invoices properly in hi accounts? Has he already paid VAT on the unpaid invoices?

[northernladuk]

I'd misread the original post and hadn't realized that the suggestion is that he works for C instead of A/B, and assumed he was talking about working extra hours under the current "contract" to complete the work in his own time.

I'll let you off

[DirtyDog]

I was talking about him working for client C at the same time so he has multiple revenue streams. Yes it is on a per contract basis but works very well for the BET's

I'd misread the original post and hadn't realized that the suggestion is that he works for C instead of A/B, and assumed he was talking about working extra hours under the current "contract" to complete the work in his own time.

[northernladuk]

I agree - which is why I said that I was assuming that "the delays can be put down to his mistakes, of course."

I still disagree that working extra hours and being paid for those hours helps your IR35 position, though.

I was talking about him working for client C at the same time so he has multiple revenue streams. Yes it is on a per contract basis but works very well for the BET's

[northernladuk]

Firstly, John has received 55k thus far so has been paid to end Nov. There is a real product although the software is incomplete. Due to the level of stress being so high now, its not a concern if any more is received and he wont chase it. He just wants to move on with as little collateral damage as possible and NEVER repeat these mistakes again!!!

I don't agree with all this at all. When he stops work the stress will end. Chasing his money isn't stressful, his solicitor does it on his behalf. He has worked it so he is legally entitled to every penny and there are a lot of people out there that would agree and can help him get it. If he cares so little about it tell a solicitor he can have half of whatever he recovers and leave him to it. No stress.

I do find this 'John says' scenario a bit creepy TBH

[DirtyDog]

I don't see any indication whatsoever this is due to Johns mistakes. The fact it mentions him working all the hours gods sends would indicate it's just late due to timescales not issues of work quality.

A later post from the OP indicates this as well.

If it was due to mistakes then yes I would agree but I am sure this isn't the case.

I agree - which is why I said that I was assuming that "the delays can be put down to his mistakes, of course."

I still disagree that working extra hours and being paid for those hours helps your IR35 position, though.

[northernladuk]

I'd disagree with that - if he is being paid to fix things that he did wrong, then that is typical of an employee relationship; if he isn't being paid to fix his mistakes then that's a B2B contract.

That assumes that the delays can be put down to his mistakes, of course.

I don't see any indication whatsoever this is due to Johns mistakes. The fact it mentions him working all the hours gods sends would indicate it's just late due to timescales not issues of work quality.

A later post from the OP indicates this as well.

If it was due to mistakes then yes I would agree but I am sure this isn't the case.

[Murder1]

Thanks for the advice guys

John should really thank us, the advice is for him

[DaveHills]

"John" needs to get some legal advice IMO but I'm pretty sure he can't be liable for any contractual obligations between Company A and B - he's liable for those between his own Ltd and Company A however but then without a written contract he's into the realms of implied contracts and as such he needs professional advice not forum advice.

I can't however get my head around how he can agree to deliver a fixed piece of work by a given deadline but then invoice per hour. Is he working per hour or on a fixed price piece of work? There's potential that even though he's agreed to deliver work by a given deadline that because he invoices per hour he's able to recoup some/all of the £20k even if he walks but a legal bod will be able to advise.

John is paid by the hour for the work. All hours and what he has done are tracked. At the beginning of the contract, Company A agreed the work with Company B on a timescale to secure i.e. an unrealistic one. John said that they would be lucky to get it done in that time frame (why John didn't see all this coming from that point I don't know).

Whilst he sees your point, for years John has been working two jobs and its one of the reasons why he decided to go contracting. The hours are not much a concern, its just the level of stress associated with the work which is beginning to affect health. Company C work is also 4 days per week so there is time for follow up work i.e. any updates and bug fixes (obviously not more work though!!!) and it should get him out of a sticky situation with references (while nothing has been said, he assumes that it would be along the lines of 'good work but takes ages').

We know it is going to go tits up just from this line alone.

Company A has a contract with Company B yes?

And what is the payment agreement for these long hours? He has somewhere in an email what his daily rate will be and a log of all the time spent? ... or has he just done this on word of mouth in an adhoc method? What documentation does he have to evidence all this?

That is very good of Company A but what does that have to do with John. He has no relation to Company B at all. He delivers to Company A who have to pay him as they have or agreed to do. What Company A gives away has no bearing on John. You have to be very clear with the relationships.

How on earth did John let it grow to 20k. What are the chances of him actually seeing this? Is company A a decent bloke or is he just going to shut the LTD leaving John in the lurch?

That is an understatement and a half

He is a better man than me in that situation

About bloody time IMO

Is he going to get paid for doing this work out of time? If so it's not a bad option and good for IR35. If it is for free then tell them to **** right off!!

Breach of what? There is no contract. The only implied contract you could argue here is that John turns up, works and Company A pays him by the hour. It would appear to me that if anyone is in breach here it is Company A if they haven't paid him in a reasonable timescale. John would be failing in his duties as director to even continue working on this pile of poo so I can't see how anyone could hold it against him for leaving. He isn't getting paid for extra work that he has no control of. It's just ridiculous.

What might be a problem is if there are email chains about what John has agreed to deliver... but again it appears he hasn't been paid so not unreasonable to withdraw services if there is no payment.

Normally we would say forget it because it won't go legal. People can't be arsed going through the courts chasing loses that aren't really there but it Company B do sue Company A for a large wad Company A may not have any other choice to try recoup loses from John but a horribly messy and potentially very expense situation to try prove. I can't believe for one minute Company A would try this or succeed.

If I was John I would have a solicitor on to Company A for unpaid bills + interest and be knocking on Company C's door as quickly as possible. Very admirable for him to do the right thing but he needs to learn when enough is enough.

Firstly, John has received 55k thus far so has been paid to end Nov. There is a real product although the software is incomplete. Due to the level of stress being so high now, its not a concern if any more is received and he wont chase it. He just wants to move on with as little collateral damage as possible and NEVER repeat these mistakes again!!!

Company A does have a contract to deliver a product to Company B.
John has no written contract. Emails do indicate that John was around from the beginning and that he would work designing the product. Company A is responsible for managing the project, interfacing with the customer and has the contractual obligations.

The invoices outstanding amount to 20k just because of the number of hours worked. Last paid invoice was for December.

If John was being fair, he would admit certain failings but Company A are just not managing the project and John doesnt feel its his duty, nor does he have the time! I.e. getting extra people to spread the load...etc.

Thanks for the advice guys

[TheCyclingProgrammer]

Originally misread OP and thought that the agreement to work for free past the deadline was just between John and Company A. As NLUK said, what Company A has agreed with Company B isn't John's problem. Unless he is directly responsible for the project over running, why on earth would he agree to providing his services free of charge?

John should heed all of the above advice and get legal help. It depends on what was agreed but he might not be obliged to continue providing any services if he is owed money.

His priority IMO would be to get paid and then work from there. He says he doesn't want to leave Company A in the lurch but if he hasn't paid, why should he care? Payment first, goodwill later!

[DirtyDog]

Is he going to get paid for doing this work out of time? If so it's not a bad option and good for IR35. If it is for free then tell them to **** right off!!

I'd disagree with that - if he is being paid to fix things that he did wrong, then that is typical of an employee relationship; if he isn't being paid to fix his mistakes then that's a B2B contract.

That assumes that the delays can be put down to his mistakes, of course.