Restrictive clause in contractor agreement

steampowered

As you point out, the agency has suffered no "loss" in this case, since the client decided to stop using them. So they can't claim damages. To my mind that creates a really very strong argument that the "contractual fines" in your contract are penalty clauses and restraints of trade; so I'm pretty confident (though one can never be 100% sure) that a judge would find they are not legally enforceable.

In order to move this forward, the next step would be:
- A short formal "letter before claim" seeking payment within 14 days. You can find suitable templates online.
- If the agency fails to make payment within 14 days, you can issue legal proceedings. It's very easy to do this - you can do it online through the government's website: https://www.moneyclaim.gov.uk/web/mcol/welcome

At £24k, your claim would go through the county court system. However it would technically be a "fast track" claim, not a "small claims track" claim - the small claims limit is £10k.

In the fast track, unlike the small claims track, the loser in litigation is usually ordered to pay the winner's legal costs. If this was a small claim I'd suggest doing it yourself but as it is a fast track claim you have the option of instructing solicitors and claiming their legal costs from the agency.

I would suggest writing a formal "letter before claim" yourself, insisting on payment within 14 days. If the agency still refuses to pay up you can then decide whether you want to instruct lawyers or whether you want to issue the claim yourself.

Marcon

steampowered said:

At £24k, your claim would go through the county court system. However it would technically be a "fast track" claim, not a "small claims track" claim - the small claims limit is £10k.

No - the Money Claim Online ('small claims court' as it used to be known) maximum is £100,000. See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/762843/mcol-userguide-eng.pdf for full details.

MinuteNoodles

Vin82 said:
 I am struggling with the finances as my money is blocked by the agency. Can the expert on this forum help me to suggest the way out to get my money from the agency?

I take it you're self employed/Ltd and not PAYE? In that case it's simple. What action you can take is determined by the payment terms listed in the Terms and Conditions Of Business you/your business got the agency to sign. If they're not in compliance with the payment terms in the contract you got them to sign then you pursue it through the courts if needs be. If you don't have any terms of business or didn't get them to sign any then they can basically take their sweet time to pay you and make any deductions they see fit with little legal redress other than that the law allows you under protections for small businesses which is basically limited to applying interest at 8% for payments over 28 days. 

General_Grant

Marcon said:

steampowered said:

At £24k, your claim would go through the county court system. However it would technically be a "fast track" claim, not a "small claims track" claim - the small claims limit is £10k.

No - the Money Claim Online ('small claims court' as it used to be known) maximum is £100,000. See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/762843/mcol-userguide-eng.pdf for full details.

I think you will find that Money Claim Online is not the "'small claims court' as it used to be known.  The latter is now making a Money Claim which is limited to £10K.

steampowered

Marcon said:

No - the Money Claim Online ('small claims court' as it used to be known) maximum is £100,000. See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/762843/mcol-userguide-eng.pdf for full details.

Moneyclaimonline can be used to issue claims up to £100k.

That's different to the small claims track. After you issue a claim through MCOL it will be allocated to the small claims track, fast track or multi track.

Anything which is £10k or less will get allocated to the small claims track. £10-25k goes to the fast track. Above £25k goes to the multi track.

In the fast track or multi track, the loser is usually ordered to pay the winner's legal costs.

nicechap

Vin82 said:

Thanks, The amount of the invoices is 24k  , does it comes under small claims?

2 months invoices = £24k?  = annual income of £144k.  

It would not surprise me if this is a business to business relationship if you are referred to as a service provider in the contracts. You really should speak to a professional, MCOL could take 6 - 18 months to get to a hearing. 

Vin82

Hi All,
Thanks for the advise, I have sent the letter before action to the Agency , giving them 14 days of time before go for the Court proceedings. The guy called me and tried to scare me that they have lot of solicitors and all to deal with this. I will just find out a good solicitor for me in case if the agency doesnt pay me in 14 days.
Any further advise will be helpful.

Thanks,
Viny

motorguy

Vin82 said:

Hi all,

I worked via an agency with a client for more than 4 year as a contractor. My contract was ended on 27th of March 2020.  The client changed their business policy for contractors and now only hiring contractors through preferred suppliers, my agency was not in the list of preferred suppliers and hence the client said they won’t engage with that agency. I got a new role with the same client via their preferred supplier (starting from 30th March 2020). I have my two months invoices due with my previous agency and they confirmed on 31st march that I will get the payment for both invoices on 24th April 2020. Instead of the payment I received an email on 27th April saying you have breached the contract as you have joined the client directly and that is why it’s a compliance issue and we are stopping the invoice payment until this is addressed. I am trying to call them and contact them via email to discuss and understand but I am not getting any response only an email came saying we will come back when compliance team will provide an update.

 I am struggling with the finances as my money is blocked by the agency. Can the expert on this forum help me to suggest the way out to get my money from the agency?

 Thanks,

Viny

You've been on £12,000 a month for four years and you're really struggling with finances?

I'm an IT Contractor and have similar clauses.  The issue for them is that they were probably getting a min of 10% per day on top of the rate they were paying you.  So over the course of a year they'd loose out on a lot of revenue.

I think you're going to struggle to get the money without legal action and TBH i'm not convinced you're entitled to it.  You might be, but you may well have to go to court to find out which will be expensive.

Try posting on the forum on https://www.contractoruk.com/forums/ - they may be able to offer advice and direction.

motorguy

Vin82 said:

Thanks, The amount of the invoices is 24k  , does it comes under small claims?

I think the reality is if you go down this route they will turn up with a bunch of lawyers and case law as to why they are right.

I think you need proper legal advice and representation, but i'd put something on the contractor forum i listed above in the meantime to get a steer.

steampowered

motorguy said:

I think the reality is if you go down this route they will turn up with a bunch of lawyers and case law as to why they are right.

I think you need proper legal advice and representation, but i'd put something on the contractor forum i listed above in the meantime to get a steer.

It's unlikely that an IT agency has lawyers on speed-dial, or is willing to pay for an army of lawyers over £24k worth of invoices.

It's much more likely they will pay up, as soon as they know their bluff is called. Companies like this will string people along for years if they think they can get away with it.

More likely they are trying to save a bit of money during Covid-19 by finding any excuse to avoid paying the Op, rather than legal masterminds.