Contractor ignoring request to pay as contract through an intermediate agency.

[Switch]

A subcontractor is working for a construction company through an employment agency. The employment status is self-employed with payment and CIS deductions made by the agency on the receipt of authorised timesheets from the construction company. The final timesheet was not approved, and the subcontractor issued a notification to the construction company adding Statutory Interest and recovery costs under section 5A (2) in accordance with the Late Payment of Commercial Debts (Interest) Act 1998. The construction company consequently approved the timesheet for the agency to pay, but only the principal was received. The subcontractor has written to the construction company informing them that he is at liberty to offset the Statutory Interest and recovery costs first against any payment received before the principal sum. The construction company now ignores correspondence, and the agency says they require authorisation from the construction company to make payment. The issue is the subcontractor’s contract is with the agency but working for the agencies client, so how can the payment be enforced when the agency is not refusing to pay but requires authorisation from their client.

[ULA]

Not sure if I have understood the issue correctly and whether this helps.

The Conduct of Employment Agencies and Employment Businesses Regulations 2003 Regulation 12 – prohibits the agency from withholding payment because a timesheet is not signed.

If a signed timesheet is not produced the agency is probably entitled to delay payment for a short time whilst enquiries are made to ascertain whether the work was carried out. However, crucially, it does prevent the agency making a signed timesheet an absolute pre-condition for payment.

[efpom]

From memory S.115? of the Construction Act may be in play here.