Recruitment Agency Non-Payment – Act Quickly When it Happens

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Agency Non-Payment
Agency Non-Payment of Invoice to Contractors

Recruitment Agency Non-Payment

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Contractors need to act quickly on Recruitment Agency Non-Payment of their contracting fees.

As soon as a contractor hears that their agency has problems they must act very quickly.

It’s extremely likely that the contractor has lost any money that is outstanding to him or her.

Monthly invoice
Monthly Invoice paid Twice

All of those invoices that they sent and which they don’t have any money for yet are probably worth nothing.

It takes a while for this to get through to contractors sometimes. Many of them just continue as normal. That’s whilst worrying more and more each day that the payments don’t arrive.

Living in Hope

Each day they sit around without taking action on agency non-payment is likely to be another day of no pay.

They live in hope that everything will be OK and that they will get the money owing to them. They hope they will get pay for the time that they’re currently putting in.

Allmost certainly they won’t.

They may even get reassurance from calls to the agency who may tell them that things should work out shortly. Allmost certainly they won’t.

Agency in Receivership

According to one agent that we talked to who, speaking anonymously, said that contractors whose agencies had gone into receivership “are up the creek without a paddle” I’m afraid.

agency liquidation
Agency Liquidation – What to do When Your Agency Goes Bust

“First of all, the contract will not be worth the paper it’s on. They are unlikely to get any of their money”.

If the agency misses a payment to you, or is late, this non-payment should set the alarm bells ringing.

Recruitment Agency Broke the Contract

If the agency has broken the contract with the contractor then the contractor must act immediately.

According to Christopher Shaw of PS Computer Services in Southampton, “If an agency is not paying its contractors, then it is in fundamental breach of contract. A contractor agrees to perform a certain number of hours of work per week.

“The agency agrees to provide payment for the work carried out. Non-payment is as serious a breach of contract as a contractor not turning up for work.”

Contract With Client

So, on agency non-payment, can the contractor just dispense with the agency when they don’t pay up within the stipulated period, and go direct with the client or choose another agency?

It’s not as simple as that.

Although the agency has broken the contract with the contractor, the agency hasn’t broken its contract with the client as the contractor keeps turning up every day for work.

The client must therefore legally keep paying the agency (or the receiver) the money according to the contract for the work that the contractor is doing – until the agency breaks the contract.

Agency Broke It’s Contract

Is this a Catch-22 situation?

Not quite. As you are no longer getting any money, and the agency broke its contract with you, you no longer have to honour the contract by turning up for work.

Bust Agency
Bust Agency

Once you stop turning up for work, the agency breaks its contract with the client as it has a contract to provide your services for a set period of time unless you are ill or have permission for your absence, which you don’t.

Turning up for Work

It would be crazy, of course, to stop turning up for work.

What you must do is to talk immediately with your client at the company where you are providing a service.

Tell him or her about the situation that you are in.

They will be sympathetic.

They will want to retain your services, but they understand that you don’t enjoy working for nothing, or throwing money into a black hole.

Recruitment Agency Non-Payment – Our Advice

Most companies have a legal department and they can help you out with advice on what to do next.

This happened to me once, and the advice that the company gave me was that I had to break the contract between the agency and the client by not turning up for work for one day.

After that the company told me that they would withhold any future money from the agency and have a direct contract with me.

Luckily it didn’t come to that for me.

The agency were just starting up and had cash flow problems, rather than being in the middle of being shut down.

Agency Advice for Contractors
Agency Advice for Contractors

Stop Leaking Cash

Any money that the client has paid to the agency already for your services is likely to be gone.

Even money that the client has not paid to the agency yet is likely to have gone as they are contractually bound to pay it to the administrators.

You mustn’t haemorrhage any more though.

If you don’t want to go direct, preferring to use another agent, or if the client you are working for won’t take contractors direct, you can always negotiate a good deal with another agency.

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1 COMMENT

  1. Just had my pay slip from new company what my pay rates have droped below the national minimum wage. Not paying tax not getting empolyer pension only paying small amount of Ni isthis company playing fair. Did not have any say in moving in fact did not know anything about it

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