My Niece not being paid for last 6 weeks work

[mark88man]

I will catch up with results when my OH catches up this evening. I can confirm (having now seen the contract) there is a right of substitution so if that was a critical test for being an employee that's unfortunate. There was plenty in their about hourly rates, there was reference in surrounding letter to disciplinary's, and no mention of withholding, or penalty clauses.

I did mention but will remind them about the household cover. I have already suggested that they might want to consider if spending £100-£200 for an hours advice would be worth considering. Like I said I will update when I have the news !!

[mark88man]

Employment tribunals have been mentioned but she won't have access to an employment tribunal under normal circumstances because she has not been 'employed' for 2 years. .........................

I think that you are getting confused, the two year period of employment requirement refers to claims for for unfair dismissal. In this case we are talking about an illegal deduction from wages ( effectively all the wages for a six week period). There is no minimum period of service required to bring a claim at an Employment Tribunal for this, see ERA 1996. Therefore, The Employment Tribunal is the appropriate forum for this type of claim.

There still appears to be confusion between what it might say in a written contract and the actual legal position. The Courts including Employment Tribunals look at what is really happening in reality, rather than the wording of a contract. If you are working regular hours for a single employer, under their control and direction and being paid, you are likely to be an employee. This could apply even if you had no written contract.

You might have heard of the Uber case, the issue is are the drivers self employed or workers. The Supreme Court is due to give a judgement on this on Friday of this week

That's very interesting. And as I am sure this won't resolve before Friday will be keen to follow what is decided about Uber

[NeilW]

Thank you again, had a chat with my niece to confirm, it is a small Ltd family company with Husband and wife as director's and a couple of employees and a dozen further or so contracted (ie not employed but contracted). It seems that there are about 4 companies owned by them and set up in a similar way for different businesses

Oh good, it's a company.

The process is as follows. Obtain proof that your niece has indeed completed the work requested, to the extent that somebody else would accept that the money is owed in full.

Then make a statutory demand for payment to the company's registered office. https://www.gov.uk/statutory-demands

If they don't respond in the 21 days, you then have the right to make an application to the court to wind up the company.

A statutory demand normal wakens people up that you are serious and will get their company suspended from operating if they don't pay. The trick is to get to the point where you can freeze their bank accounts and are therefore unable to pay themselves or their employees.

The problem at the moment is that the system is suspended until 31st March due to Covid-19, which as you can see some people are taking full advantage of.

NeilW

[Clitheroekid]

The process is as follows. Obtain proof that your niece has indeed completed the work requested, to the extent that somebody else would accept that the money is owed in full.

Then make a statutory demand for payment to the company's registered office. https://www.gov.uk/statutory-demands

If they don't respond in the 21 days, you then have the right to make an application to the court to wind up the company.

A statutory demand normal wakens people up that you are serious and will get their company suspended from operating if they don't pay. The trick is to get to the point where you can freeze their bank accounts and are therefore unable to pay themselves or their employees.

The problem at the moment is that the system is suspended until 31st March due to Covid-19, which as you can see some people are taking full advantage of.

NeilW

A word (actually several words) of caution. Firstly, you can only use a Statutory Demand if the debt is for more than £750 (which I'm guessing it is).

Secondly, you must be absolutely sure that the money is due. If you issue a SD against a company for a debt that turns out to be contested on grounds that may offer the company a good defence the company can apply for a High Court injunction against you to stop you issuing a Winding Up Petition (`WUP'). If successful they would usually be awarded their legal costs, which would be several thousand pounds.

Thirdly, it costs £1,880 just to issue a WUP, and it's not something that a lay person should attempt to do - it's definitely not like the small claims court! A solicitor would typically charge at least £500 + VAT to issue one, so you're looking to lay out around £2,500 just to get the claim off the ground. Although, if successful, you should recover most, if not all of these outlays there's always the risk that the company is actually insolvent, in which case you probably won't.

Fourthly, as has been said, it's virtually impossible to issue a WUP at present, due to the provisions of the Corporate Insolvency and Governance Act 2020, which has effectively imposed a moratorium on issuing Petitions until the end of March.

[mark88man]

Thank you all very educational, and as ever pointing out the sparseness of my OP. Some further facts

* The debt is for under £2000 - so big for a youngster but small in terms of some of the remedies
* ACAS and CAB have both come back and said they weren't sure how they could help (implication was they needed a firmer statement as to whether it was a employee grievance or a contract claim). This was a bit disappointing, but possibly having two lines of attack is always going to lead to mixed messages

My feeling is to tell her to focus on a straight small claims court approach, as that seems the most straightforward, although possibly more at risk of accusations of non performance (despite the contract focussing on hourly rates)

If she goes down this route and is rebuffed, can she reopen the illegal withholding angle covered or is a case of choose your strategy and have to stick with it

[dspp]

My apologies, I've only just seen this thread, and in any case the usual good eggs are already giving thoroughly good advice.

However there may be another line of support. If I understand correctly she has been paid a few times already. Was it always the same amount, or similar ? Is there any associated paperwork ?

regards, dspp

[fisher]

Does she raise invoices to get paid? What does the contract say with regards to payment terms? Standard payment terms are 30 days from the date of the invoice. After those 30 days I believe you should write to them pointing out that interest is now payable on the invoice and inviting them to pay asap. Then I think you may need to write to tell them you are intending to take action i.e. the small claims court (letter before action). There is a procedure for all of this (google 'Dunning' and read the linked articles on that contractoruk post I referred to earlier). You have to be sure to demonstrate you have given them ample time and reminders to pay before getting courts involved.

Unless the contract specifically has "performance" clauses in it I don't think they can withold payment citing "performance issues".

In all of this IANAL and I would recommend posing the question on https://www.contractoruk.com/forums/accounting-legal/ to get comment from people who may have been through this before.

[Grumpsimus]

Thank you all very educational, and as ever pointing out the sparseness of my OP. Some further facts

* The debt is for under £2000 - so big for a youngster but small in terms of some of the remedies
* ACAS and CAB have both come back and said they weren't sure how they could help (implication was they needed a firmer statement as to whether it was a employee grievance or a contract claim). This was a bit disappointing, but possibly having two lines of attack is always going to lead to mixed messages

My feeling is to tell her to focus on a straight small claims court approach, as that seems the most straightforward, although possibly more at risk of accusations of non performance (despite the contract focussing on hourly rates)

If she goes down this route and is rebuffed, can she reopen the illegal withholding angle covered or is a case of choose your strategy and have to stick with it

It is very difficult to give individual advice in a forum like this, because we are not aware of the full facts, so it can only be generalised advice on what we know.

I would suggest that you have a look at the CAB website which has sections on Employment Law, not being paid properly and making small claims.

If she can go the Employment Tribunal route and make a claim as a Worker for illegal deductions of wages, any claim must be made within 3 months less i day of when she should have been paid. The advantage of this route is that the claimant doesn't have to pay any fees.

If she can't go the Employment Tribunal route, she make an online Small Claim. The limitation period for this is 6 years. The disadvantage of this route are the fees payable, for a claim btween £1500 -£2000 the initial fee is £105 and further fees become payable at latter stages. The CAB website has a fairly good guide on how to make a money claim.

You can do both but there is very little point in this.

[Charlottesquare]

To me the threat mentioned above that she considers this was employment, that tax and NI ought to have been dealt with, and in the absence of payment she likely intends to inform the appropriate agencies of HMRC etc is possibly the strongest weapon she has; it is cheap, hopefully if it works it is quick and it avoids the legal process.

She possibly writes (recorded delivery) stating (clearly heading "without prejudice") that having taken professional advice she has been advised that the engagement likely had the hallmarks of employment and implying in her letter that her next course of action will be to press a claim at an employment tribunal/small claims for withheld wages, notify HMRC that she believes her employer failed to correctly deal with PAYE/NI as part of her employment, and that in addition she has also been advised (if appropriate) that holiday pay is now due to her as has not been paid. She can clearly state that unless full payment of £XXXX is received by y date she intends to take the steps previously described.

[mark88man]

So thanks again.

Further information
* payment is 30 days in arrears
* previous invoices have been for similar amounts, although with a history of not paying for additional tasks over the core service (about 20 hours per week)

I think my niece was a bit gloomy because of the ambivalent response from ACAS/CAB, although is waiting for a call back from a CAB specialist. I have some time spare on Friday, so I will draft up a letter for her then, based on your kind advice.

[fisher]

If I understand you right she has been invoicing for extra hours (above the core hours) but she has not been paid this - they only paid for the core hours.

I think this is yet another pointer towards employment that you can threaten them with. Expecting people to work outside their core hours for no extra pay is typical of an employer- employee relationship, and not typical of people who charge by the hour.

[dspp]

So thanks again.

Further information
* payment is 30 days in arrears
* previous invoices have been for similar amounts, although with a history of not paying for additional tasks over the core service (about 20 hours per week)

I think my niece was a bit gloomy because of the ambivalent response from ACAS/CAB, although is waiting for a call back from a CAB specialist. I have some time spare on Friday, so I will draft up a letter for her then, based on your kind advice.

Personally, imho, I would take a different tack. I would commence on the basis that it is invoiced fees for contracted services and present a LBA. Then follow up with Small Claims Court. On the LBA I would close with a sentence along the lines of, "unless I am misunderstanding and this is an employment contract in which case please advise so I can seek alternative remedies".

I think this is the least contentious avenue, i.e. services rendered, bill due, pay now.

regards, dspp

[mark88man]

Thank you DSPP - my niece's worry is that doing it that way the director will fabricate "non performance" issues - whereas with the employment route that really goes away. Even though the contract does not appear to have non performance component. Hmmm - just when I thought it was clear, I think I will try to write both letters, and as you say your nice segue at the end means we don't have to choose one strategy now

[mark88man]

Following a bit of a google based on suggestions, I found https://www.gov.uk/guidance/check-employment-status-for-tax - I filled in the answers to the best of my knowledge and it concluded that my niece was self employed, solely giving as a reason that the potential to use a substitute was within the contract. I would be grateful for feedback from those with experience from the employee side as to whether this is shot below the waterline to that approach, or just exactly what is expected

Thank you

[fisher]

Following a bit of a google based on suggestions, I found https://www.gov.uk/guidance/check-employment-status-for-tax - I filled in the answers to the best of my knowledge and it concluded that my niece was self employed, solely giving as a reason that the potential to use a substitute was within the contract. I would be grateful for feedback from those with experience from the employee side as to whether this is shot below the waterline to that approach, or just exactly what is expected

Thank you

Is it an unfettered right of substitution or can the "employer" reject the substitute on a whim? It needs to be unfettered really to be worth anything.

[chas49]

It might be worth questioning a little further on the 'right of substitution'. You state that this was specified in the contract - was this actually agreed by your niece before she took the work on - or was this document sent to her afterwards. How did she get the contract? Did she tender for the work with a statement of what services she was going to deliver, or respond to somthing like an invitation to tender? Or was she interviewed just like applying for a 'normal' job. How much of the selection process appeared to be based on her being the right person to do the job? Did she offer her hourly rate or was a rate advertised? It's quite possible the 'right of substitution' is there in name only - can she reasonably point to anything which suggests that she could not have sent someone else to do the job?

I appreciate that none of this answers the question you posed, but it may help you to elicit a bit more about the true situtation before deciding which way your niece might proceed.

(EDIT: I also agree with fisher's question in the post he made while I was writing this)

[pompeygazza]

you might also want to work out what her hourly rate was with the extra hours she was doing unpaid as this may make them culpable to paying less than the legal minimum wage. Big no no if she was to take them to court, local paper may wish to know as well.

[mark88man]

Some answers on substitution - there is no right of rejection.

The contract was signed before starting, following an interview following a local job advert - not a formal tender process. The contract does have a list of roles to be performed, and it does state that additional hours would be invoiced and paid at the same rate (marginally above minimum wage). The rate was offered by the Director not by her. However I need to check what was said in regard to payment of such additional hours.

[Grumpsimus]

The Supreme Court has ruled that Uber drivers are Workers and not self-employed.

Although the facts will different in each case, it useful to look at the judgement in the Uber case and see how the Supreme Court came to its decision. Basically, it looked at the reality of what was happening on the ground, not what it said on a bit of paper. Courts are well aware of what employers are trying to do with artfully worded contracts.

In the case of your niece, the employer has said he is not paying her because she made a mistake. Courts and Employment Tribunals (really a specialised Court for employment matters) are well aware of this gambit and they will ignore it. The correct course for the employer is to bring a claim against your niece, taking legal action if appropriate. This is extremely unlikely to happened. Did the mistake ever happen, what was the value involed? It is telling that she was not told of the mistake at the time, if it was of any consquence, and has still not recieved any details of it.

The 'mistake' appears to be an example of bluster and bullying behaviour by the employer. I suggest that your niece ignores it as not being relevant.

[mark88man]

Thank you - I just saw that news and came on hear to share, but Team Lemon Fool beat me to it.

I'm sorry I have been busy with my own work but my niece and I are going to have a legal strategy meeting tomorrow - and I think this is highly relevant. I will update when all that has happened