Self Employed Contractor - Do I have any rights?

[meemok]

I have a feeling I am stuffed, but it's worth a shot.

 

As in the title, I am self employed, and have been working with/for a guy for almost 6 years now. (Technically, he is a client of mine.) Lets call him John.

 

John was just a one-man band working from his kitchen, I started working with him and helped him grow his company. Every client his company has, I have brought in. (Some of them were my own personal clients which I brought to the company as my workload increased, as I didn't want to lose them)

 

Middle of last year, he moved into an office complex, and started having meetings with a guy down the hall who styles himself as a 'business angel'. John now starts 99.9% of his sentences with "fundamentally" or "going forward". Annoying, but fair enough, we're both earning well and business is good.

 

Went into the office on Friday (I work remotely, mainly from home or clients locations) and he told me that he now wants me in the office monday to saturday, 9 'til 5. I said I couldn't do that as I have my own clients too and they prefer to work directly with me and not through another company. I also have family responsibilities which he is very aware of.

To add to that, he still wants me to work on a self employed basis. No contract, no employee benefits, no employee protections!

 

I said I would consider it if he made me an actual employee, but he said it would cost the business money to do that, and if I don't take his offer, there will be no more work for me. At all.

 

I told him I would think about it, went home, and immediately started contacting my old clients and told them I was leaving John's company. They all said they would stick with me, and cancel their contracts with John.

 

Saturday morning, John rang. He said if I would sign an non-compete agreement with him (purely related to my old clients) work would continue as usual, and he would take on someone part-time to cover duties in the office. I thought that sounded O.K., and went and signed the agreement saturday afternoon.

 

6:30 yesterday (sunday), I got a call from some guy. He now works for John, doing my job, and my services are no longer required

 

He blatantly had no intention of continuing things how they were, and now I can't do any work for any of my old clients for 2 years. I spoke to one of them earlier, and they had received an email saying John would give them 50% off if they signed a deal for 12 months. I assume he has sent that to all of them.

 

We had roughly 13 projects lined up through May and June, most of which I got signed up, and I was relying on the money from them. There is no way I can make that much work up with the clients I currently have.

 

The non-compete agreement was just that, it didn't mention anything about work continuing as usual if I signed. Hindsight is wonderful

 

Legally, is there anything I can do?

[Crapstone]

Although not a legal wizard, I think this is not going to end well and you'll lose money trying to fight it. John has the signed agreement and you have nothing to fall back on other than words exchanged.

 

I'd get the agreement checked over for any clauses that you could turn to your advantage but other than that I'd say to start from scratch as it already seems you were the magnet and the brains behind the business.

 

Did you have any sort of agreement before, such as introduction fees or for final payment? Did you receive a regular wage? Just because you are self-employed it doesn't mean that you can't be classed as employed and you still may have some rights depending on the circumstances.

[Gbarbm]

Hi

Sorry to hear of your predicament.

My advice would be to correctly establish your employment status. You can do this by going on the HMRC website and putting ESI in the search box (ESI = employment status indicator) this will provide you with a status opinion based on your circumstances.

Did you ever have a written agreement or a particulars of engagement with this guy and if so what were the details regarding payment, hours of work, notice periods etc

[Crapstone]

It's worth looking at if you have an established contract, although not a written one, by the length of time and the nature of your business relationship. If it was always agreed, and has been accepted over the 6 years, that you'd get payment at the end of any client work then that may well still apply even though you signed the agreement. If it's routine and accepted by both parties it can be seen as a contract just by behaviour.

 

It could also be argued that 2 years is excessive and I recall some argued cases that a limit of 12 months is the usual bind and not above that.

Edited April 16, 2012 by Crapstone

[assisted blonde]

Was the non compete clause just within a certain radius? also although you can sign these clauses they are not necissarily enforceable if it would stop you working?

What type of industry is it, would a non compete clause be usual in your type of work?

One other thing even if your old clients are going with this new guy the std may not be as good and they could well come back to you.

[meemok]

Thanks for replies guys.

 

To answer in order:

 

... I think this is not going to end well and you'll lose money trying to fight it. John has the signed agreement and you have nothing to fall back on other than words exchanged.

 

pretty much as I thought

 

Did you have any sort of agreement before, such as introduction fees or for final payment? Did you receive a regular wage?

 

The only thing we had signed before was a generic 2-way NDA covering his company info and my personal info.

No other agreements or contracts.

(We did have a verbal agreement that any work coming from clients that were originally mine would be offered to me first, and that if the client offered any extra/bonus payments, they would go to me and not the company. That was always stuck done.)

 

Each project we worked on had it's own contract unique to it regarding timelines, budget, payments e.t.c.

John would organise the projects with the clients, send me the contract and brief, I did the work, then invoiced him.

 

I charge different fees for different types of work. Some hourly, some daily, some per job, so no regular 'wage'.

 

My advice would be to correctly establish your employment status. You can do this by going on the HMRC website and putting ESI in the search box (ESI = employment status indicator) this will provide you with a status opinion based on your circumstances.

 

 

It says :- Based on the information you have provided, the worker is self-employed.

 

 

It could also be argued that 2 years is excessive and I recall some argued cases that a limit of 12 months is the usual bind and not above that.

 

AND

 

Was the non compete clause just within a certain radius? also although you can sign these clauses they are not necissarily enforceable if it would stop you working?

 

The non-compete agreement only covered clients that I had personally brought to the company.

From the little info I have found regarding non-compete (restraint of trade) clauses in UK law, they are quite restricted in their permitted scope. The employer would need to prove a legitimate business interest above and beyond just the threat of competition. I think he would have a legitimate reason as if I took all my clients, his business would suffer dramatically.

 

What type of industry is it, would a non compete clause be usual in your type of work?

 

(prepare for yawn)

I am a digital designer. I create graphics for print and web, and also user interfaces for desktop applications and internet/intranet portals, and I visit client sites to help with integration.

I'm not sure if non-compete clauses are the norm, I've never had to sign one before. They are probably normally tucked away on line 9000 in tiny small-print legalese.

 

One other thing even if your old clients are going with this new guy the std may not be as good and they could well come back to you.

 

I've seen some work done by the new guy he hired... To be fair he is pretty good, but I have heard back from almost all my old clients and they are pretty disgusted at what has happened, and said to stay in touch and they will definitely want me back on side after the non-compete time expires.

 

When I started doing this work, word-of-mouth and a few cleverly worded emails was all it took to get a new client. Now, it is nigh on impossible because of the amount of international hiring websites out there for freelancers and the like.

I just cannot compete with the prices from asia/far east, and everybody has a bottom line to watch. That is the very reason I wanted to keep my existing clients with me.

 

 

Am I just having a moan and feeling sorry for myself, or is there any possibility of fighting (and winning) this?

[Crapstone]

I seriously think you'd have to go word for word on the agreement and that's going to be expensive in the legal world. I'd certainly seek to reduce the time to 12 months and get advice on it. I fear that if you were to take up any serious challenge it would drag on for months/years and the cost just wouldn't be worth it even if you did win.

 

However, you could seek a way around it by looking into what involvement it means. Is it worded that you can't become an a employed agent through someone else or by a company that has it's own legal identity? If it's not you dealing direct or 'receiving payment' then there could be some hope depending on the wording of the agreement. Perhaps that's worth looking into?

[assisted blonde]

Hi apologies for my terrible spelling mistakes in my last post, typing too quickly. I agree that if you took your exisiting customers away by offering better deals etc he would have a case, new customers are a different matter as customers dont belong to anyone they decide where to go. I think the best bet is speak to him and say 2 years is far too long and that a court wouldnt uphold it but that you are prepared not to contact the exisiting customers, (but if they contact you thats different).

To be fair I doubt if John wants the expense and hassle of going through court if you do break the clause but obviously I cant say for sure but I do think that if one or 2 of your clients that you brought with you to the company choose to use you directly it may not cause much more than a bit of huffing and puffing and a few nasty letters.

I dont think its worth a long drawn out legal battle just a bit of give and take, if you had a good relationship with John prior to this can you not meet up with him for a chat and see if you can sort somrthing a bit fairer out, it seems that this "Business Angel" has influenced Johns thinking which is shame as it has spoilt a relationship that was of benefit to you both,

Finally customers may want to save money but they also like to be able to trust who they are dealing with, so you may find a few more dont like this situation and come back to you sooner rather than later.

Good luck