Offered half what's owed for work done - small claims?
Discussion
Not sure whether this should be in 'Jobs & Employment' forum or here. Plumped for here, but can a mod move if appropriate?
A business I've worked for on a freelance basis for several years is closing down. The business is owned by a huge conglomerate and hasn't gone bust, it is just one segment that wasn't profitable so they've decided, very suddenly, to cut it.
I do work for them on a freelance basis, basically preparing survey type reports. Many of these simply aren't needed now, as the business has stopped. The people running it have contacted me and said that since these are no longer required they will pay me half for the outstanding ones as this is 'industry standard'. The reports aren't invoiced, they get invoiced as they're used (just how it has always worked).
My view is that the work has been commissioned, price agreed, and completed. All but two have been filed (the last two the work had been done but the reports were not written before the chop, and there didn't seem much point at that point), so I believe that they need to pay up in full.
The total amount owing is just short of £20K. Half of that is therefore just under £10,000. I've just been told today that they are only paying half, and I need to respond.
My question is, since the small claims court limit is £10,000, can I pursue it through there? On the one hand the total amount is nearly £20K, on the other the disputed amount is just under the threshold.
As an aside, despite being freelance, 99% of what I do has been for this company (they've kept me very busy) and I've been working for them for about four years. Someone mentioned I might have accrued 'employee status' and be due redundancy etc. I had no intention whatsoever of perusing this, as far as I was concerned I just wanted paying for work completed. But as a bargaining chip (pay me what's owed or I pursue everything, outstanding work, legal costs and employment rights) does it have any merit?
I really don't want to fall out with this company, there is a small chance other areas of their business could use me in the future (although unlikely to be anything like to the same level). But equally I can't just turn my back on nearly £10K, especially when my income has just dropped to almost zero.
Appreciate people's thoughts on this.
A business I've worked for on a freelance basis for several years is closing down. The business is owned by a huge conglomerate and hasn't gone bust, it is just one segment that wasn't profitable so they've decided, very suddenly, to cut it.
I do work for them on a freelance basis, basically preparing survey type reports. Many of these simply aren't needed now, as the business has stopped. The people running it have contacted me and said that since these are no longer required they will pay me half for the outstanding ones as this is 'industry standard'. The reports aren't invoiced, they get invoiced as they're used (just how it has always worked).
My view is that the work has been commissioned, price agreed, and completed. All but two have been filed (the last two the work had been done but the reports were not written before the chop, and there didn't seem much point at that point), so I believe that they need to pay up in full.
The total amount owing is just short of £20K. Half of that is therefore just under £10,000. I've just been told today that they are only paying half, and I need to respond.
My question is, since the small claims court limit is £10,000, can I pursue it through there? On the one hand the total amount is nearly £20K, on the other the disputed amount is just under the threshold.
As an aside, despite being freelance, 99% of what I do has been for this company (they've kept me very busy) and I've been working for them for about four years. Someone mentioned I might have accrued 'employee status' and be due redundancy etc. I had no intention whatsoever of perusing this, as far as I was concerned I just wanted paying for work completed. But as a bargaining chip (pay me what's owed or I pursue everything, outstanding work, legal costs and employment rights) does it have any merit?
I really don't want to fall out with this company, there is a small chance other areas of their business could use me in the future (although unlikely to be anything like to the same level). But equally I can't just turn my back on nearly £10K, especially when my income has just dropped to almost zero.
Appreciate people's thoughts on this.
You've got a contract with them to complete work.
It doesn't matter whether they use it or not. Restaurants don't give you 50% off if you leave your veg on your main course. They made it as you asked them.
Do you have a written contract for the works?
The 'court' is the same. There's no such thing as a small claims court, it's a popular misnomer. You apply to court, and based on the facts of the case it will be allocated to 'track'. Usually below £10k is small claims, above is fact track, not always though. I recently filed a simple claim for £11k, and it was allocated to the small claims track.
All that means is the protocol is different.
Small claims track: Each party pays their own solicitors costs, no big document disclosure and case management process.
Fast Track: The loser pays the majority of the costs, there are case management conferences etc.
In your case, you have a simple contractual situation. The commissioned you for work, you did it, they must pay you. Whether they still need the work is irrelevant.
The most basic analysis is that they should pay you for the whole contract, full stop. The next consideration would be (if they argued this) if you made any savings by not completing some of the commissioned work, that could be argued.
Looking at the values involved, my advice would be to get a solicitor - commercial litigation - to look at it. No local family law types, often their advice is rubbish.
My tact, if there is still commissioned work that you have not yet completed would be to write to them. Confirm in writing the scope of the contracted works, confirm what you've done, and what you've not yet done, and ask them to formally confirm that they want to stop work.
Effectively (subject to your contract with them and what it says of course) they've breached the contract with you, by pulling out of the agreed works, and that needs to be formally nailed down first so you can then start getting settlement.
Your starting point should be payment for the contract in full.
EDITED TO ADD - They are contacting you and asking you to respond to agree to accept half. Don't. Especially if that could be seen as full settlement.
You have a very strong position if you go to court as you will of course win. If you win, they pay your court and solicitors costs, on top of the amount. So, they'll settle. My tact would be to not move from the £20k, and bluff them out.
It doesn't matter whether they use it or not. Restaurants don't give you 50% off if you leave your veg on your main course. They made it as you asked them.
Do you have a written contract for the works?
The 'court' is the same. There's no such thing as a small claims court, it's a popular misnomer. You apply to court, and based on the facts of the case it will be allocated to 'track'. Usually below £10k is small claims, above is fact track, not always though. I recently filed a simple claim for £11k, and it was allocated to the small claims track.
All that means is the protocol is different.
Small claims track: Each party pays their own solicitors costs, no big document disclosure and case management process.
Fast Track: The loser pays the majority of the costs, there are case management conferences etc.
In your case, you have a simple contractual situation. The commissioned you for work, you did it, they must pay you. Whether they still need the work is irrelevant.
The most basic analysis is that they should pay you for the whole contract, full stop. The next consideration would be (if they argued this) if you made any savings by not completing some of the commissioned work, that could be argued.
Looking at the values involved, my advice would be to get a solicitor - commercial litigation - to look at it. No local family law types, often their advice is rubbish.
My tact, if there is still commissioned work that you have not yet completed would be to write to them. Confirm in writing the scope of the contracted works, confirm what you've done, and what you've not yet done, and ask them to formally confirm that they want to stop work.
Effectively (subject to your contract with them and what it says of course) they've breached the contract with you, by pulling out of the agreed works, and that needs to be formally nailed down first so you can then start getting settlement.
Your starting point should be payment for the contract in full.
EDITED TO ADD - They are contacting you and asking you to respond to agree to accept half. Don't. Especially if that could be seen as full settlement.
You have a very strong position if you go to court as you will of course win. If you win, they pay your court and solicitors costs, on top of the amount. So, they'll settle. My tact would be to not move from the £20k, and bluff them out.
Edited by JustinP1 on Wednesday 3rd September 12:17
Justin, that's fantastic, thank you! 
It pretty much confirms my feelings on the matter.
I have written to the company rejecting their offer of 50% owed, told them I want 100%, asked them to reconsider and put their response in writing to me.
I really don't want to fall out with these guys, but I'll have no hesitation in going legal if it comes to it.
Thanks again.
It pretty much confirms my feelings on the matter.
I have written to the company rejecting their offer of 50% owed, told them I want 100%, asked them to reconsider and put their response in writing to me.
I really don't want to fall out with these guys, but I'll have no hesitation in going legal if it comes to it.
Thanks again.
Keep your eye on when they plan to wind up that arm of the business, and check if your contract is with a small sub-company or the main group (I.e. identify who your legal letter/action will be directed at). If they reply to the effect that they will not pay then I would immediately send the 'letter before legal action' giving them seven days to pay. I am no expert but if someone takes all the money/assets out of the company and declares it insolvent then I think you could have a very hard time getting paid even if you win a legal judgement.
There are also late payment guidelines online as to how much interest you can charge on the debt..
There are also late payment guidelines online as to how much interest you can charge on the debt..
Edited by TurricanII on Wednesday 3rd September 21:08
Edited by TurricanII on Wednesday 3rd September 21:10
Ari said:
As an aside, despite being freelance, 99% of what I do has been for this company (they've kept me very busy) and I've been working for them for about four years. Someone mentioned I might have accrued 'employee status' and be due redundancy etc. I had no intention whatsoever of perusing this, as far as I was concerned I just wanted paying for work completed. But as a bargaining chip (pay me what's owed or I pursue everything, outstanding work, legal costs and employment rights) does it have any merit?
I'm not an accountant or a lawyer but I'd be very wary of trying this. It's a two way street, if you're an employee then you'd pay tax at PAYE rates and also the appropriate National Insurance and you wouldn't be able to claim all those allowances or expenses you do as a self employed? sole trader?Eric may well be along later to point out to you that you may well be an employee in the eyes of the taxman anyway and it's something you should urgently talk to an accountant about. A notorious tax rule called IR35 if you want to read up on it yourself.
Thanks, good advice. I've been using an accountant and paying the correct amount of tax and NI so I don't think that will be a problem. I'll only go that route if advised to by a lawyer in any case.
I've written and told them that I request either full payment, or written confirmation that they do not intend to pay me in full so that I may take appropriate action. Nothing heard yet...
I've written and told them that I request either full payment, or written confirmation that they do not intend to pay me in full so that I may take appropriate action. Nothing heard yet...
951TSE said:
Ari said:
As an aside, despite being freelance, 99% of what I do has been for this company (they've kept me very busy) and I've been working for them for about four years. Someone mentioned I might have accrued 'employee status' and be due redundancy etc. I had no intention whatsoever of perusing this, as far as I was concerned I just wanted paying for work completed. But as a bargaining chip (pay me what's owed or I pursue everything, outstanding work, legal costs and employment rights) does it have any merit?
I'm not an accountant or a lawyer but I'd be very wary of trying this. It's a two way street, if you're an employee then you'd pay tax at PAYE rates and also the appropriate National Insurance and you wouldn't be able to claim all those allowances or expenses you do as a self employed? sole trader?Eric may well be along later to point out to you that you may well be an employee in the eyes of the taxman anyway and it's something you should urgently talk to an accountant about. A notorious tax rule called IR35 if you want to read up on it yourself.
It seems like you want to have your cake and eat it. Happy with the pay perks while it suited you but crying 'employee' as soon as it doesn't.
Ari said:
As an aside, despite being freelance, 99% of what I do has been for this company (they've kept me very busy) and I've been working for them for about four years. Someone mentioned I might have accrued 'employee status' and be due redundancy etc. I had no intention whatsoever of perusing this, as far as I was concerned I just wanted paying for work completed. But as a bargaining chip (pay me what's owed or I pursue everything, outstanding work, legal costs and employment rights) does it have any merit?
This would deped on a number of factors; for instance IR35 will only apply if you offered your services through a limited company. If not, a number of other factors would be taken into account:
1/ Did you have a contract that stipulated the terms for the wortk carried out?
2/ Where was the work carried out, in a place of your choosing or theirs?
3/ Did you have to do the work personally or could you suncontract it/get someone else to do it?
4/ Were you paid a set fee or an hourly/daily rate?
5/ Did you provide any equipment or was everything provided by them?
These are just off the top of my head but there will need to a more detailed look into your relationship with the company do give you a view.
TurricanII said:
Keep your eye on when they plan to wind up that arm of the business, and check if your contract is with a small sub-company or the main group (I.e. identify who your legal letter/action will be directed at). If they reply to the effect that they will not pay then I would immediately send the 'letter before legal action' giving them seven days to pay. I am no expert but if someone takes all the money/assets out of the company and declares it insolvent then I think you could have a very hard time getting paid even if you win a legal judgement.
There are also late payment guidelines online as to how much interest you can charge on the debt..
They're being cheeky & trying it on IMO.There are also late payment guidelines online as to how much interest you can charge on the debt..
The devil will be in the paperwork but so long as you've some sort of paper trail then it sounds like you'd be good to go.
Hit them hard & hit them quick before elements of the Company get wound up and yes, late payment charges & interest would add £hundreds more to your pocket
My rottweiller in such cases is Colin at http://www.matrixlegal.co.uk/collect/ - he'd be happy to have a no obligation chat on the phone.
KFC said:
If you tried this, or even threatened it, to another company I certainly wouldn't give you any contracting work in the future. Why would I possibly want to give you contracting work when you're potentially going to threaten me with "I was actually an employee...." if we have a dispute further down the line? Companies in the same industry talk, or even here if one is closing down you could end up dealing with the exact same people in their new jobs.
It seems like you want to have your cake and eat it. Happy with the pay perks while it suited you but crying 'employee' as soon as it doesn't.
Kind of missing the point there, bucko! It seems like you want to have your cake and eat it. Happy with the pay perks while it suited you but crying 'employee' as soon as it doesn't.
Very happy to just have my cake, problem is they wanted to only give me half of it, despite being given all the ingredients for a whole one. The whole point of the 'employee status' thing was the possibility of a potential lever to make sure I got paid in full if it were needed, nothing more.
Anyway, the good news is that they are paying up in full for the work completed. Not sure whether it was a ruse or whether they genuinely felt that they were entitled to just pay half, but either way I'm very happy, and have a bit more breathing space whilst I find something new.
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