What to do if a Client Cancels a Contract

There are now more people than ever who are joining the contracting community – whether as umbrella company contractors, sole traders or limited company owners – and with the numerous benefits associated with being self-employed, it is no surprise to see why this method of working is growing in popularity.

Just a few of the benefits that come with working as a contractor includes:

• Having more control of your career.
• Having more flexibility – you can work as often or as little as you like (of course, the less you work, the less money you will make) and you will have more choice when it comes to who you want to work with.
• Having the opportunity to potentially earn more than a permanent worker in the same role.
• You are able to claim back expenses that are made wholly and exclusively for the running of your business, which will in turn reduce your tax bill at the end of each year.
• If you’re a limited company contractor you will have more tax benefits, such as the Flat Rate scheme.

Of course, with most things in life, there are some negatives to contracting. For example, if you work from a home office you could find yourself being quite lonely during the day, you will need to ensure that you are motivated enough to get out there and find a constant supply of work and you will have more responsibility compared to your ‘permie’ counterparts.

Another issue that some self-employed workers could come across is if a client decides to cancel a contract.

What steps can I take if a client cancels a contract?

There are some risks that come with contracting and one of these is the fact that you could have a job set in place and then the client decides to cancel either before or during the contract.

Unfortunately, being self-employed means that you won’t have the same employment rights as a permanent worker, however, you do have some rights. For example:

• You are entitled to be paid for any work that you have carried out for your client.
• You must work in a safe and healthy environment.
• You should not be discriminated in the place you are working.

An example of typical contract breaches contractors may come across includes:

• Late payment or not being paid at all.
• Terminating a contract without enough notice.
• Cancelling the contract before work has started.
• Clients demanding services that are not included in the contract.

Many contractors will choose to create their own terms and conditions contract in order to protect themselves. This could include the expectations and the start and end date of a job before starting any work – it might even be worth including a notice period.

If a client cancels before signing the contract then there isn’t too much that you will be able to do from a legal perspective.

If they have signed the document, then they have in effect breached the contract and this will mean that you have every right to take legal action. But this can be very costly, so you need to consider whether it’s worth going down this route or not.

You could try talking to the person in charge or responsible for the breach before taking any action, however, if nothing can be resolved you could then look to hire a solicitor for just a few hours in order to discuss your grievance and see what can be done about the issue. That way you are not parting with as much money and can get an idea of where you stand and whether it is worth pursuing the case or not.