Agency wont pay my invoice because end customer has not paid them

[aokanlawon]

I’ve been to court numerous times and we relied on the opt opt before supply after introduction. It is the judges that matter.

In essence are you saying that the opt out is invalid? Since I signed after I have been introduced to client?

[aokanlawon]

I need more than that to give you an answer but actually it's completely irrelevant as the clause may or may not be legal.

So take a step back,

1) Do you have signed timesheets?
2) Have you appropriately, correctly and legally opted out of the Agency Regulations prior to being introduced to the client?

If the answer to 2 is No (and chances are even if the agency thinks they have issued an opt out correctly, they probably haven't) then the clause is once again irrelevant.

So basically go to the small claims court with the appropriate evidence (unpaid invoice, signed timesheets, you can probably even ignore the contract to begin with) and start a claim for the money. Chances are once the agency sees that they will work out a means of paying.

Next time however be far more organised - this should have been at Safe Collections by 10th April 2020 and heading towards court by the end of June.

Hi Eek, here is an update on this...

All here is an update after engaging a solicitor. Here is what the solicitor has advised..
-----
As promised, I have undertaken a review of the documents provided to me by Adam Home at Safe Collections Limited, which comprise:



‘Provision of Services Agreement & Schedule’, dated 17 January 2019;
‘Contractor Schedule’, dated 25 February 2020.
Letter from companyx to mycompany , enclosing ‘Provision of Services Agreement, Terms and Conditions & Schedule’. These documents are not signed and it is unclear on what date they were sent to you.


As I understand it, your limited company is owed in region of £13,000.00 by compabyx in respect of services it supplied to a company called 3XP Solutions Limited, who are now in liquidation. There is one outstanding invoice (I do not have a copy) and it relates to work undertaken during the month of March 2020. companyx have refused to pay you on the basis that they have not received payment from 3XP Solutions Limited.



Having viewed the e-mail correspondence you have exchanged with Adam, I can see that he has drawn your attention to Clause 10(b)(ii) of the Terms and Conditions that accompany the unsigned Provision of Services Agreement. This states:



“… we may withhold payment if … we do not receive, or we have proper reason to believe that we may not receive, payment of any sums including Expenses”.



You appear to have agreed to this term by reason of the fact you have signed Provision of Services Agreement & Schedule, dated 17 January 2019 and the Contractor Schedule, dated 25 February 2020.



The relationships between employment agencies / businesses and contractors are regulated by The Conduct of Employment Agencies and Employment Businesses Regulations 2003 (“the Regulations”). These regulations contain, at Regulation 12, restrictions on the rights of employment agencies / businesses to withhold payment from contractors. Regulation 12 states:



“An employment business shall not, in respect of a work-seeker whom it supplies to a hirer, withhold or threaten to withhold from the work-seeker (whether by means of the inclusion of a term in a contract with the work-seeker or otherwise) the whole or any part of any payment in respect of any work done by the work-seeker on any of the following grounds –



Non-receipt of payment from the hirer in respect of the supply of any service provided by the employment business to the hirer;
The work-seeker’s failure to provide documentary evidence authenticated by the hirer of the fact that the work-seeker has worked during a particular period of time, provided that this provision shall not prevent the employment business from satisfying itself by other means that the work-seeker worked for the particular period in question;
The work-seeker not having worked during any period other than that to which the payment relates; or
Any matter within the control of the employment business.”


However, Regulation 32(9) permits a work-seeker which is a company to opt out of the Regulations – provided that it gives notice to an employment agency / business and that notice is given prior to the introduction or supply of the work-seeker to the hirer.



As I understand it, your position is that you effectively entered into two contracts with X4 Group Ltd:



An initial contract for the provision of services, dated 17 January 2019 (“the First Contract”); and
A further contract for the provision of services, dated 25 February 2020 (“the Second Contract”).


It is evident from the face of the First Contract that you agreed to opt out of the Regulations. However, I cannot see that you agreed to opt out of the Regulations for the purposes of the Second Contract. If that is the case, it may be possible for you to rely on Clause 12 of the Regulations and argue that the withholding of payment by companyx, notwithstanding Clause 10(b)(ii) of the Terms and Conditions that accompany the unsigned Provision of Services Agreement, is unlawful. For that reason, my initial recommendation would be that we consider sending a letter before action to demand payment of the balance outstanding.



If a letter before action does not result in payment or a response from companyx, the next stage would be to issue court action. The initial cost of doing this would incur legal fees of £200.00 plus VAT and a court fee equivalent to 5% of the debt.



Finally, before instructing us to threaten companyx with court action, it may be worth you giving consideration to the impact not opting out of the Regulations (for the purposes of the Second Contract) will have upon your tax position. I am not a taxation lawyer but it may be worth you checking with your accountant before providing me with further instructions, just in case it will cause you problems.
-----

With regards to the last paragraph, is there anything to worry about not opting in as the solicitor mentioned. I have not seen anything based on my research so far, can you please advise.

Many thanks

[eek]

In essence are you saying that the opt out is invalid? Since I signed after I have been introduced to client?

What Andy is saying is that he has been able to convince courts (incorrectly in my view) that the or statement relates to thevlast bit that occurs not the first - which is the opposite my personal opinion and the lawyer I referenced above.

As for the response you received I would be hoping to use multiple attacks

1) that the second contract without the opt out overrides the first
2) the opt out in the first contract is invalid as it was asked for after introduction

As there is little point only using 1 argument in court when multiple attacks are available.

[Lance]

Hi Eek, here is an update on this...

All here is an update after engaging a solicitor. Here is what the solicitor has advised..
-----
As promised, I have undertaken a review of the documents provided to me by Adam Home at Safe Collections Limited, which comprise:



‘Provision of Services Agreement & Schedule’, dated 17 January 2019;
‘Contractor Schedule’, dated 25 February 2020.
Letter from companyx to mycompany , enclosing ‘Provision of Services Agreement, Terms and Conditions & Schedule’. These documents are not signed and it is unclear on what date they were sent to you.


As I understand it, your limited company is owed in region of £13,000.00 by compabyx in respect of services it supplied to a company called 3XP Solutions Limited, who are now in liquidation. There is one outstanding invoice (I do not have a copy) and it relates to work undertaken during the month of March 2020. companyx have refused to pay you on the basis that they have not received payment from 3XP Solutions Limited.



Having viewed the e-mail correspondence you have exchanged with Adam, I can see that he has drawn your attention to Clause 10(b)(ii) of the Terms and Conditions that accompany the unsigned Provision of Services Agreement. This states:



“… we may withhold payment if … we do not receive, or we have proper reason to believe that we may not receive, payment of any sums including Expenses”.



You appear to have agreed to this term by reason of the fact you have signed Provision of Services Agreement & Schedule, dated 17 January 2019 and the Contractor Schedule, dated 25 February 2020.



The relationships between employment agencies / businesses and contractors are regulated by The Conduct of Employment Agencies and Employment Businesses Regulations 2003 (“the Regulations”). These regulations contain, at Regulation 12, restrictions on the rights of employment agencies / businesses to withhold payment from contractors. Regulation 12 states:



“An employment business shall not, in respect of a work-seeker whom it supplies to a hirer, withhold or threaten to withhold from the work-seeker (whether by means of the inclusion of a term in a contract with the work-seeker or otherwise) the whole or any part of any payment in respect of any work done by the work-seeker on any of the following grounds –



Non-receipt of payment from the hirer in respect of the supply of any service provided by the employment business to the hirer;
The work-seeker’s failure to provide documentary evidence authenticated by the hirer of the fact that the work-seeker has worked during a particular period of time, provided that this provision shall not prevent the employment business from satisfying itself by other means that the work-seeker worked for the particular period in question;
The work-seeker not having worked during any period other than that to which the payment relates; or
Any matter within the control of the employment business.”


However, Regulation 32(9) permits a work-seeker which is a company to opt out of the Regulations – provided that it gives notice to an employment agency / business and that notice is given prior to the introduction or supply of the work-seeker to the hirer.



As I understand it, your position is that you effectively entered into two contracts with X4 Group Ltd:



An initial contract for the provision of services, dated 17 January 2019 (“the First Contract”); and
A further contract for the provision of services, dated 25 February 2020 (“the Second Contract”).


It is evident from the face of the First Contract that you agreed to opt out of the Regulations. However, I cannot see that you agreed to opt out of the Regulations for the purposes of the Second Contract. If that is the case, it may be possible for you to rely on Clause 12 of the Regulations and argue that the withholding of payment by companyx, notwithstanding Clause 10(b)(ii) of the Terms and Conditions that accompany the unsigned Provision of Services Agreement, is unlawful. For that reason, my initial recommendation would be that we consider sending a letter before action to demand payment of the balance outstanding.



If a letter before action does not result in payment or a response from companyx, the next stage would be to issue court action. The initial cost of doing this would incur legal fees of £200.00 plus VAT and a court fee equivalent to 5% of the debt.



Finally, before instructing us to threaten companyx with court action, it may be worth you giving consideration to the impact not opting out of the Regulations (for the purposes of the Second Contract) will have upon your tax position. I am not a taxation lawyer but it may be worth you checking with your accountant before providing me with further instructions, just in case it will cause you problems.
-----

With regards to the last paragraph, is there anything to worry about not opting in as the solicitor mentioned. I have not seen anything based on my research so far, can you please advise.

Many thanks

Sounds promising.
I wouldn’t worry about the opt out impacting IR35. I’d be chasing the £13k.
Opt out has no specific bearing on IR35 as far as I’m aware either in legislation or case law. Agencies always push the opt out as it protects them from exactly what’s happening.
I’m surprised the lawyer suggests getting legal advice from an accountant though...

[aokanlawon]

What Andy is saying is that he has been able to convince courts (incorrectly in my view) that the or statement relates to thevlast bit that occurs not the first - which is the opposite my personal opinion and the lawyer I referenced above.

As for the response you received I would be hoping to use multiple attacks

1) that the second contract without the opt out overrides the first
2) the opt out in the first contract is invalid as it was asked for after introduction

As there is little point only using 1 argument in court when multiple attacks are available.

Thank you! You are simply fantastic.

[aokanlawon]

Sounds promising.
I wouldn’t worry about the opt out impacting IR35. I’d be chasing the £13k.
Opt out has no specific bearing on IR35 as far as I’m aware either in legislation or case law. Agencies always push the opt out as it protects them from exactly what’s happening.
I’m surprised the lawyer suggests getting legal advice from an accountant though...

Thank you and this is why I signed it. I was lured with the trap of IR35 ( naive me)

[northernladuk]

You didn't sign your contract??

[northernladuk]

Sounds promising.
I wouldn’t worry about the opt out impacting IR35. I’d be chasing the £13k.
Opt out has no specific bearing on IR35 as far as I’m aware either in legislation or case law. Agencies always push the opt out as it protects them from exactly what’s happening.
I’m surprised the lawyer suggests getting legal advice from an accountant though...

I didn't read anything about legal advice from an accountant. He's saying looking in to the tax situation. Not 100% sure why but seems a reasonable first step.

[aokanlawon]

You didn't sign your contract??

No I meant why I signed the opted out part of the contract

[Lance]

I didn't read anything about legal advice from an accountant. He's saying looking in to the tax situation. Not 100% sure why but seems a reasonable first step.

Accountants don’t really understand the legal complexities of IR35. They don’t need to. All they need to know is how to apply it when counting beans.
So asking an accountants opinion about the impact of an opt-out/in on tax is asking the wrong profession IMO.