Reply to: New Contract Withholding Part Payment Until Contract Complete

[BlasterBates]

Nothing wrong with the conditions but I would compare the basic contract rate with other offers. Only if they were the same or very similar would I evaluate the contract as better, i.e. discount the withheld amount. There is no guarantee you will receive it, and therefore don't treat it as expected income.

[GigiBronz]

What if when you are 1day to go before contract ends and Agency terminates the contract? Would you have any legal standing?
Client bins the project 1.5y into the contract with no feedback, would you still get the money? What if you decide not to play ball with one of the PM's that is not taking your advice then they say you were not up to standard?
Depends a lot on the wording of the clause but it can open a different can of worms.
Or agents might just have invented a new gimmick to make themselves more money and milk us into submission.

[Peoplesoft bloke]

You can thank all the mercenary contractors that are happy to jump ship to a gig for £20 a day more or closer to home for this type of carry on.

That's the whole point of contracting

[eek]

Lots of agents (like accountants) will go belly up in the next few years in there hard times

Bit of a risk


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It's only a risk if the agency is holding the bonus. If it's never invoiced for until the last stage is completed it's not a problem.

And yes a lot of agencies are going to find the contracting market disappearing and with it their guaranteed regular income.

[GhostofTarbera]

Lots of agents (like accountants) will go belly up in the next few years in there hard times

Bit of a risk


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[BolshieBastard]

Crikey me, I remember working for a client back in 2001 where they 'retained' 200 a week from the Test manager on a 9 month contract. Made for a nice bonus when the project completed though.

[northernladuk]

You can thank all the mercenary contractors that are happy to jump ship to a gig for £20 a day more or closer to home for this type of carry on.

[eek]

It may just be how the agent is pitching it.

"We're offering you £750 a day to deliver the project" might sound better than "We're offering £700 a day with a delivery bonus"

Hook you with £750, then tell you later that it's actually £700 with the rest coming on completion.

Thinking about it my concern would be that the company is retaining this money to try and justify some financial risk element to keep you outside IR35.

[dangerouswhensober]

Someone wants to keep £50 per day for two years and not give it to you until the two years is up? Make sure they are solvent.

Amen to that !

For £50 per day x 230 working days per year x 2 years - even my (sometimes unreliable) maths skills produce a witheld sum of £23,000.

At a (decent) rate of £500 per day, that's nearly 2.5 months witheld (gross) - more if the daily rate is less than £500 per day.

So - on these figures - you could look at it as a 10% bonus on finishing the contract.

(Personally, it wouldn't stop me from leaving the contract part way through, if the people or conditions were awful enough).

The real question - as a previous poster pointed out - is the agency motivation - why are they doing this ? Well, they are gaining cash flow (by paying you less and keeping more in their bank account) - and it would actually be to their advantage for you to leave at some later stage (say after 23 months - they would lose their commission for a month, but they wouldn't have to pay you the bonus, which would be a lot more than their commission for that month).

And BTW - if the agency does become insolvent during the course of your contract, I doubt whether you will be a "preferred creditor" - i.e. you will not be at the top of the list when their remaining assets are distributed, and would (most likely) get nothing of the witheld money.

Over the past two years or so, I have noticed agencies becoming "tighter" towards contractors. For example, in my last contract, for the final payment (only) I had a "pay when paid" condition - meaning that the agency didn't have to give me the final monthly payment until they got paid by the client. I've been contracting for 20+ years, and I've never seen that condition before ... (And before you ask - yes, the final payment to me WAS delayed, for six weeks after the date it was due to be paid - ten weeks after the signed timesheet and invoice were submitted).

[vwdan]

It's very unusual and I'd not be happy with the terms you describe.

However.......it kind of sounds to me like they've been bitten, so perhaps the route forward is to go back and negotiate in that vein. Maybe on a 6 monthly or 12 monthly basis - though I'd still make sure you're happy with the non-bonus rate just in case it's crap.

[WTFH]

Having a retainer bonus is fine, but having that bonus come out of your daily rate sounds strange.

It may just be how the agent is pitching it.

"We're offering you £750 a day to deliver the project" might sound better than "We're offering £700 a day with a delivery bonus"

Hook you with £750, then tell you later that it's actually £700 with the rest coming on completion.

[krytonsheep]

I would spend a few hundred quid to get a lawyer to look at the contract as it sounds unusual. Having a retainer bonus is fine, but having that bonus come out of your daily rate sounds strange.

[hairymouse]

Someone wants to keep £50 per day for two years and not give it to you until the two years is up? Make sure they are solvent.

I'd also be concerned about who is going to decide when the agent pays you the money. That's going to be a big pot of money at the end and I wouldn't want to trust an agent or client to do whatever they want. Is there something in the contract that covers this?

I guess if the rate is high enough you can ignore it until the end and treat it as a bonus if you ever see it.

[ladymuck]

I was always of the belief that a retainer was paid to you, to keep you on board, and a withholding was taken away from you and paid at later date (for much the same reason but more stick than carrot)

[bobsyouruncle3403]

Thanks for all of your replies. this contract includes travel and expenses and has been deemed outside IR35.