Contractors' Questions: What if the client threatens to ignore my notice period?

Contractor’s Question:Through my limited company, I secured a 3-month contract of which I am two months into, so I’ve got one month left. My contract has a 4-week notice period, which I explicitly asked for having had to leave a previous job to take this contract.

Last week, I was called into the office and instead of getting an extension for Phase 2 of my project, they decided to terminate me. Worse still, they are claiming I haven't delivered, even though the technical lead agrees with me that I have delivered. They threatened me, saying they could just kick me out, in which case I wouldn't get 4 weeks in lieu. They then offered me 1 week's severance pay.

Bearing in mind that I feel bullied, victimised and strongly suspect a hidden agenda (as they are shedding contractors to save money), what should I do?

Expert’s Answer: If a contract provides a notice period then it is primarily enforceable. The only circumstances where it may be terminated without notice are where any other contract terms for early termination apply, or a party has committed a repudiatory breach entitling the other party to treat the contract as at an end.

A repudiatory breach must be a serious breach of the contract. From what you say it will be difficult for the other side to establish a serious breach by you, and they would have to identify that breach in detail in writing and state that they are relying on it as a repudiatory breach terminating the contract with immediate effect.

The problem for you is practical. If you take court action against them they will likely counterclaim alleging a breach by you of the contract. Here they do not have to claim a serious breach. Any breach can do, and they can offset their claim against yours. So with small clams it would probably not be worth pursuing.

In the circumstances, it would be worth sending a strong letter claiming they are in breach of contract, and denying that you have committed any breach, let alone a serious breach which would entitle then to terminate without notice.

The expert was solicitor Nigel Musgrove, on behalf of legal advisory Cousins Business Law.

Editor's Note: Further Reading -

How IT contractors are affected by Fujitsu V IBM

Contractors' Questions: Agency terminated my contract; do I have a valid claim?

Beating the IT contract crunch i) client cuts

Friday 23rd Jan 2015