Termination of Contract Without Notice

[cs174]

I'm working on a contract basis (Ltd Co.) through a UK Agency. The Agency has not been paid by their Client and may have to terminate my contract on Friday with immediate effect.

The Contract between my Ltd Co and the Agency requires one weeks notice to be provided by either party in the event of termination.

Assuming I am terminated without notice, where would I stand legally for recovering the loss of income. I realise it's only one weeks money but it's still a reasonable amount so not happy to just let it go. Is this likely to be a lengthy and costly process?

Thanks in advance.

cs174

[fergywales]

Your claim is with the agency, they are required to maintain their payment structure to your Ltd Co. that is stated in the contract. The termination of the contract between agency and client is of no direct connection to you.

[cs174]

fergywales said:

Your claim is with the agency, they are required to maintain their payment structure to your Ltd Co. that is stated in the contract. The termination of the contract between agency and client is of no direct connection to you.

Thanks. It's the contract between Ltd Co and Agency which will be terminated without notice. How would I go about recovering the loss? I'll be sending them the invoice and reminders etc but what is the next step if they still don't pay?

[fergywales]

I would advise asking the question directly post-haste. They have no valid reason to deny payment to your Ltd Co. if they are terminating because of non-payment by their client. Just remind them of this and the notice period in the contract, in a firm but professional manner, they will have been in the situation previously I am sure.

If they give any impression of withholding payment, invoice as normal, allow the standard time for payment (do not change your terms on your invoice or if stipulated within the contract, vary the contracted payment terms), if payment does not appear, issue money claim online (assuming it is below the threshold).

I would doubt very much that they will withhold payment, as their prior payments in line with the contract give you the evidence that the contract was not in question. Double check the termination clause, and any clause connected with final payments.

Did they notify you in writing of the possibility of termination?

[cs174]

I've received nothing in writing from the Agency. I was aware there was a payment issue last week when the Agency asked for information on who to speak to regarding the non-payment of their invoices. He said then that, worst case scenario, I'd be given my notice.

Move forward a week, the Agency is still unable to get their invoices paid and they are now talking about terminating the contract (Ltd. Co - Agency) on Friday with immediate effect. They're not saying they will, just that it's a possibility. They could give me a weeks notice from today if they wanted but they've chosen not to.

Thanks for the info on the money claim online, that'll be my last resort.

[Piersman2]

Been here a couple of times.

Once with a 4 week notice betwen my Ltd Co and the Agency. Unfortunately, for the Agency, they only had a 2 week period with the client. The client bagged the project, so I got sent home that day.

The Agency paid me 4 weeks money but could only re-claim 2 weeks from the client. The agency man did try and guilt trip me into not claiming my full 4 weeks, but rather in my pocket then theirs

And the other time the project I was on for a client completed and I still had 4 weeks until the end of my contact so the client wanted me out sooner rather than later. This one was more difficult as the termination clauses in the contract were badly written and the agency were trying to invoke the gross misconduct clauses to get me out with no notice ,stupid, bh that she was. The agency and myself agreed on 2 weeks termination eventually. I'm a lot more careful about termiinations clauses in contracts now.

Anyways, in the OPs situation, your contract is with the Agency not the client. Check your contract and it's termination clauses and stick to your guns, if it says 1 week notice then make sure they pay you it. No reason they shouldn't unless they are some fly by night shower of st outfit.

ETA, if they terminate the contract this friday, then based on your termination clause, they'll be paying you for next week as well, whether you're in work at the client's or not. Terminations should normally be in writing , so if they email you confirmation on Friday, that's the start of your weeks notice.

Edited by Piersman2 on Tuesday 8th March 13:31

[MickC]

This is standard contractor stuff. You can do everything people above have said, however I would stop short of actually filing a moneyclaim form (small claims court), simply because you may want/need to obtain a contract with that agency again.

Usually you negociate as much as you can on amicable terms with the agency - it depends on their markup and the length of the contract how much money they have made out of you, if it's 10% at 10 weeks, then you are asking them to pay you all their profit, even if it's their fault for putting that clause in the contract. If it's been a long contract or their markup is higher, then it's more reasonable to expect them to stump up the 1 weeks notice on termination. They may or may not pursue the client for whatevers in their contract, again it depends how much they value them as a client and what the relationship is like.

Don't burn any bridges over 1 weeks contract money, is all I am saying. Early termination is part of the game, get used to it and by all means negociate with the agency, but keep it amicable and reasonable.