Reply to: Self Employed IT Contractor – Recruitment Agency Withholding Payment

[LondonManc]

If the client cites poor performance when this was not the case, could this be slander/libel?

To be fair to agencies, they don't care - if they can sell you in somewhere else, they will, especially if they know ClientCo1 has a track record for binning people off while citing poor performance.

[Lance]

Presuming it is via your ltd co, sue them via a small claim and they are unlikely to get costs even if they win however, empty you ltd co bank account before going to court.

bad advice.....

For a start costs aren't awarded to either party in a small claims court.

Secondly.. if the LTD goes bankrupt, whilst that will cover you personally against liability, you will be on a list as a director of a bankrupt LTD. Try getting another company bank account after that, or getting past many clients vetting processes.

[pauldee]

Presuming it is via your ltd co, sue them via a small claim and they are unlikely to get costs even if they win however, empty you ltd co bank account before going to court.

I wouldn't really want any money, just for them to withdraw any misrepresentation about the quality of my work. I once worked for a company that was in a long chain of contractors. Another contractor failed to deliver something and blamed us. Letters were sent, they withdrew their claims about us and came up with a different reason for their failure.

[m0n1k3r]

The recruitment agency (xyz) I had a contract to work for a client is withholding the payment.

The client ended the contract stating that they are not happy with my performance and paid for the all work done plus one week additional for the notice period.

The recruitment agency saying they shall deduct from my payment because I breached the contract by not performing to the required standard and they incurred losses. In accordance with clause 3(f) and 10 of the contract, XZY shall deduct this sum from outstanding invoices.

Please advise on how to respond to the agency claim.


PS: I have extracted section 3(f) and 10 from the contract and shown below.

3 (f) Whenever under this Contract or otherwise arising from the relationship between XYZ and the Consultant Company any sum of money shall be recoverable from or payable by the Consultant Company, the same may be deducted from any sum then due, or which thereafter may become due, to the Consultant Company under this Contract, or any other contract between XYZ and the Consultant Company (or any of its affiliates).

10 Indemnity
The Consultant Company shall indemnify and hold harmless XYZ against any and all claims costs expenses losses or damages whether direct or consequential arising from the Consultant Company's breach of any provision of this Contract including all administration costs and all claims costs expenses losses or damages arising from the negligence or acts or omissions of the Consultant Company or its employees agents or subcontractors.

They have not incurred a loss. They have merely not made as much profit as they anticipated.

Have them clarify each and every point, such as what provisions you have broken and how.

Were there any performance standards stated in the contract? What benchmark are they comparing your performance against?

And so on.

[Paddy]

Presuming it is via your ltd co, sue them via a small claim and they are unlikely to get costs even if they win however, empty you ltd co bank account before going to court.

[SueEllen]

If the client cites poor performance when this was not the case, could this be slander/libel?

Only if you have a few 100k to spend on a court case.

[pauldee]

If the client cites poor performance when this was not the case, could this be slander/libel?

[chopper]

The fact is that clients can take a dislike to contractors for any reason (I knew a guy who got marched off site because he had a shiny new Macbook and the permies got jealous of that), and the clients who don't really understand the nature of their contracts will cite poor performance as the reason rather than "Sorry, we simply are not offering any further work".

If the client chooses to itemise the poor performance and that boils down to the contractor being a lazy **** rather than because the client didn't choose well at interview time then perhaps - subject to contract - they might have a claim, but that is probably one for a court room to explore whether said poor performance was legitimate and met any contracted threshold.

Get an account with Thomas Higgins (Business Debt Collection & Recovery Solicitors | Thomas Higgins Limited), as soon as the debt becomes overdue get them to issue a Late Payment Demand to to agency (cost is £3) and take it from there. Chances are, they'll capitulate once they get a nastygram from a legal firm rather than waiting patiently for the county court claim form. Alternatively, if your business has Legal Expenses insurance or IPSE+ membership, then use that.

[northernladuk]

Come to think of it, why VAT? It's a recovery of a debt, or a penalty for non-performance, not an invoice for services rendered so why is VAT applicable?

Because it's complete rubbish made up by the agent trying to bully the OP.

[malvolio]

The 5k+VAT sounds like the agency's missed future commission, based on the OP working to end of contract.

They shouldn't be able to take it from you as the money they have been paid so far is for work already completed that the client have been prepared to sign off. They should not withhold the payments and any lawsuit they bring against you should be a separate issue, payable from yourco's bank, not from any outstanding monies.

Come to think of it, why VAT? It's a recovery of a debt, or a penalty for non-performance, not an invoice for services rendered so why is VAT applicable?

[LondonManc]

The 5k+VAT sounds like the agency's missed future commission, based on the OP working to end of contract.

They shouldn't be able to take it from you as the money they have been paid so far is for work already completed that the client have been prepared to sign off. They should not withhold the payments and any lawsuit they bring against you should be a separate issue, payable from yourco's bank, not from any outstanding monies.

[PerfectStorm]

Got IPSE? This is the point they should 'spring into action'

[northernladuk]

the client binned him for poor performance. The agency contract (any agency contract) requires a level of performance that does not lead to him being binned. Ergo, he has breached the contract.

In more usual circumstances, such as projects drying up or whatever, then there is no breach because the contractor was not the cause.

It's not that hard to understand.

I see where you come from but they binned him as per the terms of the contract whatever the reason. It's in black and white.

We'll agree to disagree here but I'll be interested to see how this ends up so hope he keeps us posted.

[malvolio]

They haven't suffered a loss at all. The terms of the contract allow it and they were followed. It is potentially expected that the contractor might leave early, for whatever reason. That's why the terms are there. The same terms would suit the agency if they want to quit the contract early and we'd not say the OP can sue for losses.

It's there in writing...



No breach.. no losses.


Erm... The agency want 5k+ VAT off him.. You missed that bit?

the client binned him for poor performance. The agency contract (any agency contract) requires a level of performance that does not lead to him being binned. Ergo, he has breached the contract.

In more usual circumstances, such as projects drying up or whatever, then there is no breach because the contractor was not the cause.

It's not that hard to understand.

[northernladuk]

It depends. We're assuming it's 5K of the invoices he submitted for work done. It might be that 5K is the value of the remaining contract to full term, and he's invoiced them for work not done.

I can't believe that. Who invoices the full term of a contract? The agency wouldn't have accepted them anyway.

When he says '
As a result of this breach XYZ has incurred losses, such losses amount to £5k + VAT. In accordance with clause 3(f) and 10 of the contract, XZY shall deduct this sum from outstanding invoices. '

You'd imagine these are valid invoices backed up with a timesheet surely else the whole thing is a complete mess.

Would be nice if the OP can clarify though.