Contracts

Bullet1

I apologise in advance for the length of this post. I have recently signed a contract that stated that if I left within a year I would have to pay back the"development fund" money that was given to me. This totalled £4000 spread over 2 and a half months. After this time the role was making me ill so I resigned my position. On the face of it I need to give them back the £4000. BUT

I have done over 400 hours work for them. They dictated where I worked and how I worked. I used their equipment(computer, software etc). I was not allowed to do any work in the same field for anyone else. I had to do work that wasn't directly of benefit to me(commission only). I did some deals that they will now get all of the commission for.

My problem is that I have 400 work for them and if I give the money back I would have earnt nothing for it. They have also benefitted from my deals and all of my time.

There has been a case recently(Pimlico) where a plumber in a similar position was counted as a worker rather than self employed and he was paid as well!!

I know that I signed the contract but I did not foresee this happening. They are now coming after me for the money which I don't have!!

Are there any legal eagles out there who can help with some advice.
Thanks

Undervalued

Bullet1 wrote: »

I apologise in advance for the length of this post. I have recently signed a contract that stated that if I left within a year I would have to pay back the"development fund" money that was given to me. This totalled £4000 spread over 2 and a half months. After this time the role was making me ill so I resigned my position. On the face of it I need to give them back the £4000. BUT

I have done over 400 hours work for them. They dictated where I worked and how I worked. I used their equipment(computer, software etc). I was not allowed to do any work in the same field for anyone else. I had to do work that wasn't directly of benefit to me(commission only). I did some deals that they will now get all of the commission for.

My problem is that I have 400 work for them and if I give the money back I would have earnt nothing for it. They have also benefitted from my deals and all of my time.

There has been a case recently(Pimlico) where a plumber in a similar position was counted as a worker rather than self employed and he was paid as well!!

I know that I signed the contract but I did not foresee this happening. They are now coming after me for the money which I don't have!!

Are there any legal eagles out there who can help with some advice.
Thanks

Even if you were an employee this would most likely be lawful and therefore enforceable through the civil courts.

Such clauses are lawful providing there is a specific agreement in place and the amount is proportionate and reasonable.

Basically, although I realise it is of little help now, don't agree to something like this without the means of paying in the feint hope it either can't or won't be enforced.

Sorry.

Bullet1

Thanks Undervalued. I needed some clarity on the situation and I know I was an idiot for signing but I wouldn't be able to start if I didn't. It still riles me that I have done all of that work, incurred lots of travel costs and not received a penny for all of the work!!

Undervalued

Bullet1 wrote: »

Thanks Undervalued. I needed some clarity on the situation and I know I was an idiot for signing but I wouldn't be able to start if I didn't. It still riles me that I have done all of that work, incurred lots of travel costs and not received a penny for all of the work!!

There may be an argument to be made here but you would really need to get some proper one to one advice. Or you could try making some sort of offer, they may be minded to accept rather than risk a fight?

P.S I see you have a duplicate thread?

steampowered

If you google for 'repayment of training costs', you will find lots of information about this area. Repayment of development funds costs follows the same principle.

In general, these clauses are valid and enforceable I'm afraid. I'm not sure it really makes a difference that you have been working hard.

There is one caveat. There is such at thing as the law on 'penalty clauses', which says that a contract provision which is a penalty will not be enforced. Legal orthodoxy is that 'repayment of costs' clauses in employment contracts ought to be staggered - e.g. pay 100% if leaving within 6 months, 75% if leaving within 12 months, 50% if leave within 18 months - in order to avoid those clauses being seen as a penalty.

If the clause is a straight 100% repayment if you leave within 12 months, I think you could try to argue that the clause is an unlawful penalty and therefore unenforceable. I'm not saying that argument would hold up in court if ever challenged, but it would certainly be enough to raise a defence in court, and therefore could be something you could say to your employer to try and get them to settle for a lower amount than the full £4,000 (e.g. you could write to your employer saying that you consider the clause unenforceable and explain why but are willing to offer half in full and final settlement).

If you are still owed holiday pay or unpaid expenses you should have been reimbursed for, you could deduct those from the £4,000.

I understand the point about perhaps you were really an 'employee' rather than actually being self-employed - but I'm not sure your employment status makes much difference to this particular issue as to whether you have to repay the £4,000.

sangie595

steampowered wrote: »

If you google for 'repayment of training costs', you will find lots of information about this area. Repayment of development funds costs follows the same principle.

In general, these clauses are valid and enforceable I'm afraid. I'm not sure it really makes a difference that you have been working hard.

There is one caveat. There is such at thing as the law on 'penalty clauses', which says that a contract provision which is a penalty will not be enforced. Legal orthodoxy is that 'repayment of costs' clauses in employment contracts ought to be staggered - e.g. pay 100% if leaving within 6 months, 75% if leaving within 12 months, 50% if leave within 18 months - in order to avoid those clauses being seen as a penalty.

If the clause is a straight 100% repayment if you leave within 12 months, I think you could try to argue that the clause is an unlawful penalty and therefore unenforceable. I'm not saying that argument would hold up in court if ever challenged, but it would certainly be enough to raise a defence in court, and therefore could be something you could say to your employer to try and get them to settle for a lower amount than the full £4,000 (e.g. you could write to your employer saying that you consider the clause unenforceable and explain why but are willing to offer half in full and final settlement).

If you are still owed holiday pay or unpaid expenses you should have been reimbursed for, you could deduct those from the £4,000.

I understand the point about perhaps you were really an 'employee' rather than actually being self-employed - but I'm not sure your employment status makes much difference to this particular issue as to whether you have to repay the £4,000.

I can't imagine that paying back the whole amount if someone leaves within a year would be deemed unreasonable though. Although your example is fine, it's rather " generous". Most people who leave within a year ( and actually the OP left within a couple of months) would be expected to pay back 100%.