New Contract Withholding Part Payment Until Contract Complete New Contract Withholding Part Payment Until Contract Complete
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  1. #1

    Default New Contract Withholding Part Payment Until Contract Complete

    Hi All

    I am new to the forum, sorry if this question has already been asked. I have been contracting for several years now and I am in the process of signing a 2 year contract with a company for my service. One of the clauses in the contract states that they will retain £50 of my daily rate until the contract is complete (they are calling it a retainer). They want to do this to ensure that I don't leave before the contract ends. Once the contract is complete they will pay the "retainer". I am not very happy about this obviously, but 2 years work would be great. Is this legal? or should they be offering me a bonus to complete the contract.

    Many Thanks for your answers in advance.

  2. #2

    Prof Cunning @ Oxford Uni

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    Quote Originally Posted by bobsyouruncle3403 View Post
    Hi All

    I am new to the forum, sorry if this question has already been asked. I have been contracting for several years now and I am in the process of signing a 2 year contract with a company for my service. One of the clauses in the contract states that they will retain £50 of my daily rate until the contract is complete (they are calling it a retainer). They want to do this to ensure that I don't leave before the contract ends. Once the contract is complete they will pay the "retainer". I am not very happy about this obviously, but 2 years work would be great. Is this legal? or should they be offering me a bonus to complete the contract.

    Many Thanks for your answers in advance.

    There's nothing illegal about it. It's whether you choose to sign the contract or not.

    I'd have more concerns about other parts of the contract, such as the fact that it lasts 2 years - if you're hoping to claim travel expenses, etc. Also has the IR35 determination been disclosed?
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  3. #3

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    Quote Originally Posted by WTFH View Post
    There's nothing illegal about it. It's whether you choose to sign the contract or not.

    I'd have more concerns about other parts of the contract, such as the fact that it lasts 2 years - if you're hoping to claim travel expenses, etc. Also has the IR35 determination been disclosed?
    This +

    Change it to a 23 month contact if outside and you have expenses (you can claim zip if 24months)


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  4. #4

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    I've had this on fixed price work (e.g., final 10% of each invoice paid on completion), never on T&M and, in that context, I'd say it's irregular, at best.

    Your choice though. Why would it be illegal? (it isn't).

  5. #5

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    Thanks for all of your replies. this contract includes travel and expenses and has been deemed outside IR35.

  6. #6

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    I was always of the belief that a retainer was paid to you, to keep you on board, and a withholding was taken away from you and paid at later date (for much the same reason but more stick than carrot)

  7. #7

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    Someone wants to keep £50 per day for two years and not give it to you until the two years is up? Make sure they are solvent.

    I'd also be concerned about who is going to decide when the agent pays you the money. That's going to be a big pot of money at the end and I wouldn't want to trust an agent or client to do whatever they want. Is there something in the contract that covers this?

    I guess if the rate is high enough you can ignore it until the end and treat it as a bonus if you ever see it.

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    I would spend a few hundred quid to get a lawyer to look at the contract as it sounds unusual. Having a retainer bonus is fine, but having that bonus come out of your daily rate sounds strange.

  9. #9

    Prof Cunning @ Oxford Uni

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    Quote Originally Posted by krytonsheep View Post
    Having a retainer bonus is fine, but having that bonus come out of your daily rate sounds strange.
    It may just be how the agent is pitching it.

    "We're offering you £750 a day to deliver the project" might sound better than "We're offering £700 a day with a delivery bonus"

    Hook you with £750, then tell you later that it's actually £700 with the rest coming on completion.
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  10. #10

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    It's very unusual and I'd not be happy with the terms you describe.

    However.......it kind of sounds to me like they've been bitten, so perhaps the route forward is to go back and negotiate in that vein. Maybe on a 6 monthly or 12 monthly basis - though I'd still make sure you're happy with the non-bonus rate just in case it's crap.

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