Reply to: Client threatening to sue

[Gym beast]

TBH mate the alarm bells were ringing the moment I read the £150 /day part. Agreed it's not the lowest rate I've seen, but pretty damn close. You're obviously an intelligent and articulate fellow but possibly the rule of thumb is, the better you're paid, the better you are respected.


The old, "We can't pay you until we've been paid" is the clarion call of the crappiest, most disorganised, most poorly-financed companies.


I'm guessing too you wouldn't have taken that rate unless you needed the money, so batten down the outgoings. The rest depends on how badly you need their money, because as of today you have no other contract in hand. From what you said, I'd say keep at it but frantically hunt for something else.


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[Platypus]

If they are not able to pay you until they're paid, that sends warning flags the company is teetering on the edge of collapse and might not pay you anyway.

Absolutely agree. Alarm bells are ringing load here.

[MyUserName]

I would say your options are walk away or run away.

If they are having trouble paying you what makes you think you will get any/all of the money even when they have it to give to you?

Just think how awesome this is from an IR35 perspective and walk out imho.

[nrsql]

They've gone from paying weekly to paying monthly and now being late with that.
I think you know where it is heading.

I suspect at some point they will stop paying altogether but will try to get as much unpaid work out of you as possible. Try to reduce the amount of outstanding payments. Leave as soon as possible and don't expect any payments after you tell them you are going. Would be a good time to arrange a holiday or to be off sick.

Have you told the end client what is happening - if you have a good relationship with them you could suggest working direct - maybe getting them to buy you out of your contract.
When the end client pays shouldn't affect when you get paid - if it does your rate should be increased to compensate for your cashflow and the decreased risk you are giving to your client.

[BlasterBates]

The payment terms are in the contract, no pay then 7 days grace to payup or else and off you go.

I think I might get letter written by a lawyer, just to be sure.

[Wanderer]

What are my options? Would they have a valid reason to sue for breach of contract.

No they can't sue you, they are taking the piss and bullying you.

My advice is to start looking for a new job and then get out of there as quickly as you can. Note that if there are no contractual payment terms then proceed as if it were 30 day terms.

Once you have left, hit them with penalties and interest for late payment. See The Late Payment of Commercial Debts Regulations 2013 - Pay on Time

[gator123]

Thank you for all your replies. They have been very informative. I was going to say that there was no notice period agreed but they will no doubt say I agreed to one. They have not turned out to be the most truthful of employers and I have learnt my lesson about a written contract.

[tractor]

...

The OP also didn't mention any notice period in the original contract. If there is none, just leave, if there is notice and you don't want to extend credit, just give notice and get a cold for the length of the notice period. Not very professional, but neither is breaking payment terms or threatening suppliers. quid pro quo

[Safe Collections]

Chase them for the bad debt. Walk away and find something else.

Sounds to me like they are having money worries if they can't pay you, so I wouldn't be extending them any further credit. If they want you to continue, then get a written contract in place with weekly invoicing and seven day terms.

This.

We wouldn't put any stock in the claim that you will have to pay for the lost contract if you walk. Without a contractual relationship that explicitly states this is a possibility they are unlikely to have any chance of success...

[northernladuk]

Does that apply here - there's no mention of an agency at all in the original post

Ah, I assumed there might be as he mentioned their client a few times but could be a supplier I agree.

[DirtyDog]

What's your opt in/out status?

Does that apply here - there's no mention of an agency at all in the original post

[northernladuk]

What's your opt in/out status?

[d000hg]

If they are not able to pay you until they're paid, that sends warning flags the company is teetering on the edge of collapse and might not pay you anyway.

Unless it's a really tiny startup where I can understand sometimes this is the only way you can survive. But in that situation they shouldn't be putting on airs and graces, they need you.

[LisaContractorUmbrella]

If you have evidence of the work being done and approved by the client and they have put their payment terms (of 30 days) in writing, which you have then agreed to then you have a far better case for legal redress than they do if they have not paid you on time. You can, quite legally, add interest to the invoice for late payment - this has been raised a few times on this forum so there should be some useful links for you to check out

[DirtyDog]

Since then I was asked to the office where i was told they needed to extend payment terms to 30 days as they were not being paid by the large client for about 30 days +. I did agree verbally to this even though I voiced annoyance at changes in terms. Work has been so quiet lately so I needed the work, although my other work is now picking up so this is not so much of an issue. There is no written contract at all, although I did agree to do the dates by email.

They now are not paying on time. Current invoice is now 2 weeks late. I asked them what was happening and I was told I would have to wait until client paid them. They said I agree to that in front of 2 company directors but with no independent witnesses.

So you agreed 30 day terms, and they are late. This is where you really need a written contract, as it would easily deal with whether you need to wait for them to get paid before you get paid. Follow the advice on The Late Payment of Commercial Debts Regulations 2013 - Pay on Time and chase for the invoice. The question is whether the two directors are prepared to go to court and lie about what you said or not - if they are, then there isn't much you can do but wait.

I stated I would not do anymore work unless they paid. They said tough and that I would have to pay for the lost contract if I left.

Ask them to show you which point in the contract states that. If there is no evidence of you agreeing to that, then they can't enforce it.

What are my options?

Chase them for the bad debt. Walk away and find something else.

Sounds to me like they are having money worries if they can't pay you, so I wouldn't be extending them any further credit. If they want you to continue, then get a written contract in place with weekly invoicing and seven day terms.