Bouncing cheques

pro_bono

This cannot be the first time it has happened and I would be grateful if anybody with similar experience can point my nephew in the right direction.
Nephew is a pipe fitter by trade and has recently become self employed. He has been working for a couple of months with a sub contracter who was paying him weekly with a cheque, no problems so far...
Now the last three cheques have bounced, and even with him expressing the last one the money appeared in his account then disappeared!!.
We are now talking of him paying to work???

Any help comments on how we can proceed?

Thanks

Bean_Counter

It was my impression that since the end of November, after six days cheques could no longer bounce.

Have a look at this link to the APACS website and see if the points that they have on there fit your nephew's circumstances.

Failing that he should demand to be paid by BACS rather than cheque.

Mikeyorks

Not too many choices?

Threaten small claims court / threaten to involve the local fraud squad (knowingly issuing wages cheques that won't be met) / stop working for the contractor / demand cash etc.

But the one he 'expressed' is interesting. When the contractors bank received that cheque .. they should have phoned your nephews Bank to say it would / would not be met. If it was going to be met (you say the funds 'appeared') then they should ring-fence the funds and that should be it. It should not be capable of then bouncing? Rather sounds as though the sub-contractor has countermanded that one?

ericajones80

chances are this employer makes a general practice of this...he should be payed in cash/bacs

Willman_Rodders

Just picking up on Mikeyorks's comment .... if the paying bank (i.e. the sub contractor's bank) told to the collecting bank (i.e. the nephew's bank) the cheque was 'paid' any subsequent countermanding instruction by the drawer (i.e. the sub-contractor) should not be accepted by the paying bank - and the payment should stand.

If the paying bank told the collecting bank the cheque was paid when in fact there were insufficient funds on the account, or there was an existing 'stop' instruction in place that the paying banker overlooked, that is tough on the paying bank; they should stand the loss - not the payee.

With regards to what future action the nephew can take my suggestions would be:
1. Stop work until all outstanding monies are paid, in cash;
2. If need be threaten sub-contractor - as previous posts suggest;
3. Threaten to go to main contractor to expose the sub-contractor if outstanding monies not paid; this sometimes works because it means the main contractor becomes aware that the sub-contractor is ripping off his staff (and creaming off profits at their expense) and by implication will rip off the main contractor.
4. Insist on cash payments in future; and
5. Look for alternative work.

I personally would not recommend accepting future payment by BACS. BACS is great as a settlement system but an unpaid cheque is a proof of a debt (Sorry I can't remember whether it was the Cheques Act 1957 or the Bills of Exchange Act that covers this point) and can be used as evidence of the debt in court. If payment is made by BACS the sub-contractor will (in my experience) use the Banking system as an excuse for the payment getting lost, and your nephew will have no idea where he is financially; further he will have no evidence of non payment.

Not a pleasant start to being self employed. Your nephew is going through a steep learning curve.

Hope that helps.

dunstonh

and even with him expressing the last one the money appeared in his account then disappeared!!.

Special presentation wouldnt make any difference to clearing. It just speeds up the answer to whether it will be paid or not. With special presentation, the money is still credited to the account uncleared on the day you give it to the bank and once it is confirmed unpaid, they money is debited back again.

If the cheques are being bounced "refer to drawer please represent" then the bank feels its likely that funds may be there again. If the cheques are being bounced "refer to drawer" then the bank feels it is unlikely that funds would be in place if the cheque was to be re-presented.

pro_bono

I thank all who have replied (cannot seem to locate the thanks button).
I will take time to investigate the suggestions to see if I can move the situation forward to the boys benefit.
So, Dunstonh, WilliamRodders, ericajones80, mikeyorks and bean counter, Thanks again. I will post any movement good or bad, as I said in my initial post, I am sure this is not the first time it has happened and it really leaves a bad taste in the mouth, that honest tradesmen who are engaged in 'A fair days work for a fair days pay' are stiffed in this way

Regards