Money owing from March

[JohnSelf]

I have been working freelance for 5 years with only one client who I worked for exclusively.
Early this month I was told they were no longer able to afford to pay for a freelance and they were taking the work in house with immediate effect. I was told to let them know any outstanding invoices and they would make sure I was paid quickly.
One invoice dates back to March, one to April and one for the few days work I did in May before I was terminated.
Trying to get any response from them is impossible. I get different answers, no replies to texts, phone calls, and now they are blocking emails from my home email address.
At what point do I consider taking them to Small Claims Court - and indeed is that the correct next step?
I desperately need this money, as because I was self employed I am not entitled to Job Seekers Allowance or any other state benefit - even though I worked full time for 40 years prior to this 5 year self employed period - and paid full NI contributions for those 40 years. So I have ZERO income and am desperate to get paid what is owing to me.
Any help re getting paid by these people is much appreciated.

[Amy]

Re: Money owing from March

Have you reminded them the old fashioned way ie, in writing?

[CleverClogs]

Re: Money owing from March

Have you reminded them the old fashioned way ie, in writing?

And sent by Recorded Delivery or Special Delivery?

[JohnSelf]

Re: Money owing from March

Not yet, I had assumed we had quite a friendly relationship so I didn't want to get too heavy too soon, plus I worked from home, so phone calls and emails were the normal means of communication.

[MIKE770]

Re: Money owing from March

Do not assume anything in commerce, copies of all documents should be kept, so correspond with them as suggested Recorded delivery etc! you will have a trail then.

[charitynjw]

Re: Money owing from March

If you have been working exclusively for them for 5 years, even s/employed you may have limited statutory rights.[Employment Rights Act 1996 s.230(3)]
For instance, if you cannot send someone else in on your behalf to do the work, the 'client' exercises control over how, when, where etc the work is carried out, & there is a 'mutuality of obligation' (ie, an agreement for a minimum amount of work to be supplied (by them), and/or a minimum amount of work to be undertaken (by you), you may be classed as a worker/atypical worker & have rights via the ERA 1996, in particular Part II, Right not to suffer wage deductions.
Clearly, though, this needs expert advice, so I would advise contacting ACAS for a definitive answer. This may also have the added benefit of mediation.
If you do come under the ERA, the Employment Tribunal would have jurisdiction.

[Guest]

Re: Money owing from March

...So I have ZERO income and am desperate to get paid what is owing to me.
Any help re getting paid by these people is much appreciated.

Not yet, I had assumed we had quite a friendly relationship so I didn't want to get too heavy too soon...

Well, which is it?

It is time to demand the money - in writing - and then take steps to recover it should they fail to pay.

[Garlok]

Re: Money owing from March

However, this could all get a bit messy with the possibility of IR35 getting in the way. This was introduced whilst Sally Promero (UGH!) was Paymaster General. I think certain questions have to be answered and the OP make his/her own assessment of the situation.

Was any intermediary involved at all like an employment agency or was the OP a limited company, was any of this work carried out at home in a dedicated office workspace/workshops or was it all conducted on the client's premises using the client's equipment and resources? On his/her own admission this arrangement has gone on for some 5 years. That is well over the recognised limits under IR35 which normally only allowed for a 2 year stint at the same job even on major engineering contracts and then you had to be treated for tax purposes as a permanent employee WITHOUT all of the benefits only some. This also included a liability for employers NI contributions as well as employees contributions.

A "freelance" or any work carried on with the assistance of an "intermediary" "on site" as they say, is only allowed to to claim 5% of the TOTAL invoice value by way of expenses and if you are travelling to and fro by transport or by your own vehicle then these expenses cannot be claimed under "the normal place of work rules". Under an informal arrangement such as this the situation is fraught with difficulty. Frankly the whole thing has become a minefield and when I costed it all out some time ago it can cost up to 27% of total invoice value in NI alone. And they can go back!!

It is just possible that the "employer/client" could argue that monies have been retained to mitigate any responsibility he might have under IR35. The employer/client may be held partly or wholly responisible for debt to the Revenue accruing under IR35.

There are very few exceptions now to these rules despite a 50/50 court ruling with the Confederation of Small Business and the Revenue in 1998/1999. Building construction sub contract workers are one of the very few exceptions to these rules and must hold even then a "Blue Certificate" which if memory serves correctly was called a "705".

If there is a very real grievance here it might just pay to consult specialist advice as advised like ACAS and perhaps a specialist in employment law.

regards
Garlok

[WendyB]

Re: Money owing from March

What are the payment terms stated on your invoices to them? I.e the company I work for, our terms are 30 days nett, so March invoices would be due for payment at the end of April. But customers don't always pay on time, likewise we don't always pay our suppliers until they chase it, although the cheques are written and ready to go.

[Garlok]

Re: Money owing from March

Oh and by the way there have been recent changes to the rules governing corporation tax. Clubs, societies, associations, the self employed, partnerships et al have ALL been brought in to the scope of corporation tax.

Hence whilst many believe that John has a grievance which is probably morally correct, it perhaps better to temper the advice to take action via the courts with a view for him to look very carefully at his financial arrangement over the last 5 years before taking the actions suggested.

In the event of any counter claim by his employer/client all of his financial affairs under this "arrangement" would come under close scrutiny. And I know for certain that the Revenue do scrutinise these things like they watch the Deaths columns in newspapers.

regards
Garlok

[JohnSelf]

Re: Money owing from March

Ok, now you've all frightened me. I need to do some serious thinking. Thanks for all that input, it's much appreciated, although a bit daunting.

[Garlok]

Re: Money owing from March

Not meant to be frightening John, just a bit of realism and some information you should in my very humble opinion consider carefully. I worked in the engineering contract/consultancy game for the best part of 25 years. It used to be easy, now it is not and before anyone takes on the idea of "freelance", "agency temping", "self employed" it is wise to seek some advice. When these new rules came into play with a vengenance in the early noughties many many good technical people upped sticks and left for better tax advantages elsewhere even in Europe itself and the USA.

There is much more protection in a way now for temps than there used to be but there are other rules which come into play which have made it much less attractive. Done properly and being upfront with the Revenue, who will help if they can, makes a difference when you start, going in blind as many do will pretty much end in some problem or other.

Only you can make the decisions but please do look up the rulings and apply them honestly to yourself and to your own position.

Beware of wordings they contain like "relevant contract", "normal place of work", "sole client" and the like. If it was me I would seek to get my money in some amicable way from what you have said, court in this case would be my last port of call unless my accounts were spot on for the previous years and GENUINELY within the rulings.

best regards
Garlok.

[Garlok]

Re: Money owing from March

One of the things I did forget to say was that it is fundamental premise in law that "you can only go to court with clean hands". Hence you have to everything in order to bring an action.

regards
Garlok

[michelle2011]

Re: Money owing from March

I hope you can track down your money without going through the mess of court. Good Luck to you!

[JohnSelf]

Re: Money owing from March

HI all. I've finally been paid in full. I just hounded them twice a day until they got so fed up with me that they paid up.
Thanks for all the advice.