Client wants to pay me less than is stated in My Contract

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Pay Me Less
Pay Me Less for hours not worked

Pay Me Less

We received this from a reader about a client manager who wanted to ‘pay me less’.

Contract Rate – Donald

I have a contract that stipulates a certain amount of money per day.

However, in December, because a client of my client was a bit slow in signing off, I had about two weeks where I had nothing to do.

Now my client wants to pay me less, at a lesser contract rate, for those days.

Company Cut My Rate
Company Cut My Rate by 20%

They want to keep me on as I know that area of the system best and I would expect that I‘m quite lucrative for them.

What should I do, Dr. McLaughlin?

I don‘t want to p*ss them off.

Dr McLaughlin’s IT Contractor Surgery

You are within your rights to demand the full rate providing you don‘t have one of those contracts which has no Mutuality of Obligation, i.e. the client doesn‘t have to provide you with work and you don‘t have to do it.

The terms of your contract are clear and it is up to you if you want to enforce it.

Remember, if you are lucrative to them they won‘t want to piss you off either.

Terms of the Contract

However, you may want to be flexible.

Contract Rate Cut
Contract Rate Cut by Client

After all you did very little work.

Tell them that, as a one off, and to show goodwill, you will waive the terms of the contract for that month only and that the terms of the contract will continue to apply after that.

You can negotiate the amount you take off.

Outside IR35

This should help you to be outside IR35 as they look at the actual practices rather than what’s written on the contract so taking less money than is in the contract shows that this doesn’t apply in practice.

They wouldn‘t be able to do this to a permanent employee.

What you lose may be a small amount and well worth it to stay outside IR35.

Higher Contract Rate

Tell them that if, in future, that they want to give you a lesser rate for days not worked they should also give you a higher rate for days worked to balance that out.

They may go for that as they won‘t mind paying you a bit more if they are being well paid for your work.

It may suit them to have two different rates for you for when they have work and when they don‘t.

You would then hope that they will normally have work for you (and they would want that too) so it could end up in your favour.

Another Client

Maybe you could try and get another client (maybe from one of your old client’s) that you can do work for when your current client cannot provide you with work or get some project of your own to work in during the downtime.

IT Contract Rates
IT Contract Market Rates

That would definitely take you outside IR35.

Also the fact that you have two different rates would also help you outside IR35 as they couldn‘t have two different rates for a permanent employee.

Make sure, also, that in any other contract, that the terms and conditions are clear so that you don’t have to come back and say that they ‘pay me less’.

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