What Can a Contractor Do if an Employer Refuses to Pay?

Everyone expects to be paid for the work they do, but sadly, in some circumstances, this doesn’t always go to plan. So, what happens when a contractor completes their work, invoices for it, and then doesn’t get paid?

If you’re a contractor and you’re wondering whether you need to engage the services of construction dispute solicitors, or a construction barrister in London, then we’re here to shed some light.

What Does Your Contract State?

When you began work for your client, you will have produced a contract that your client would have agreed to. A thoroughly-prepared contract will have covered everything to do with -

• Late payment
• Non-payment
• Your remuneration
• Any other details such as contract length, start and finish date etc.

Your contract is basically your safety net, so if things do go wrong, take a look at what is stated in your signed contract and see if you can move forward from there.

What Does the Law Say?

Fortunately, should you find yourself in a tricky situation with regards to an unpaid invoice, the law does have something to say:

1. A contractor can charge interest and lawful fixed costs on an invoice that is paid outside of any payment terms that have been agreed in the contract between client and contractor
2. Your interest is chargeable at eight per cent above the ‘official dealing rate’ which you can find detailed on the Bank of England’s website
3. Any further invoices that are paid outside of your terms can incur a fixed level of compensation between £40 - £100 each. You may also be able to charge for reasonable costs that you’ve incurred in recovering the amount of the unpaid invoice

Chasing unpaid invoices can be hard work and can often take some time. However, if you have a thorough contract in place with your employer, you’ll be in a much better position to pursue payment and be successful.

Unpaid Invoices – What To Do

Before deciding to go in heavy-handed with the help of construction dispute solicitors, there are a few things you can try first.

When you need to chase an unpaid invoice, it’s wise to do it quickly - don’t let it fall to the bottom of your to-do pile. You’ll also need to check that you’ve understood the terms of payment and that any pre-conditions for being paid have been met. For instance, did you need to send your invoice to a certain department/a specific email address/by a certain date? If all of these factors have been met, then start out by issuing a reminder notice after a couple of days. Keep your communication polite and formal.

If possible, you could try meeting in-person, or follow up via a quick phone call – these methods are much harder to ignore than a letter or email. If these options don’t prove fruitful, make sure you do issue a written reminder as it will provide you with an audit trail if you need to take things further and hire a construction barrister in London.

Suspending Performance – Should You Do It?

No one wants to be seen as a tricky customer, but sometimes you might feel like the only course of action left to you is one of suspending performance. Even if your contract doesn’t detail any terms relating to suspending work due to non-payment, you are still able to do so as per Section 112 of the Housing Grants Construction and Regeneration Act 1996.

Nevertheless, you will still need to serve the correct notice alongside the correct warning period. If you cease work unlawfully you could be liable to pay damages for a breach of your contract, or termination. Deciding to suspend work is a big step to take. A direct access barrister who specialises in construction and employment law would be able to advise you of the best course of action should you be considering this step.

Construction Law Barrister – Is It Time to Hire One?

Non-payment of invoices can be incredibly stressful and if – however many nudges you give – you're just not getting anywhere fast, it could be time to instruct a corporate barrister who can deal with your construction law disputes.

If you’re seriously considering this move, then one last option before instructing a construction law barrister is to let your employer know this is what you’re planning on doing. This could just be the impetus your employer needs in order to pay up.

If still nothing happens, then it’s wise to gain advice from the law specialists.

Time to Terminate?

If you’re considering terminating your contract, speak to a legal professional who offers a construction contracts adjudication service. Terminating an agreement could lead to a worsening of the situation if you haven’t had a legal expert go through the fine details of your contract first. You’ll need to understand whether a breach of contract has actually occurred and what the steps are to terminate your contract. Have a look through your construction contract to see if these are detailed.

If you’re unsure, always seek independent legal advice from experts in the field in which you’re working. At Mercantile Barristers we specialise in contractual disputes and construction law so are well versed in the intricacies of cases such as these. Let a specialist from our direct access barrister team ensure you get the results you need.