Self Employed And Not Been Paid – What To Do

If you’re self employed and haven’t been paid for work you have done, it can be incredibly frustrating. Self employed people are often at the mercy of those they work for – they rely on their goodwill and trust that they will be paid for their work, but sometimes people abuse that trust. When this happens there are a few options open to you, including talking to the person you completed the work for to make them see reason, or working with a debt collection agency to escalate debt recovery where necessary.
The truth is, self employed contractors don’t have the same protections in place as employed individuals paid through the PAYE system – they don’t have the same employment rights. Below, we’ll explore those differences, look at key tips for a self employed contractor who hasn’t been paid for work completed, and suggest some useful steps you can take in the future to protect yourself when you provide services as a self employed worker.
If you’re owed money for non payment of work completed whilst self employed, our guide today will tell you exactly what to do next.
Not Been Paid UK: Employed vs Self Employed
There are a number of key differences in how employees paid through the PAYE system and how self employed contractors do work. Unpaid wages are a problem for any worker in the UK, but it’s often much easier for those employed through traditional means to get their final pay if it has been delayed or withheld without due cause.
Let’s explore some of the main differences below and how handling not being paid looks for both groups of workers.
Minimum Wage Law
In the UK there is a legal minimum wage. That means that all UK workers employed via the PAYE system will receive at least this wage per hour. Failure to pay this on behalf of the employer is illegal, and you are protected under UK employment law, so if you can prove you did the work but didn’t receive the minimum wage for that work, then you can take the employer to court and receive the money you’re entitled to. Minimum wage in the UK (as of 01 April 2024) is £11.44 per hour for employees over the age of 21.
Whilst employees are protected by UK employment law when traditionally employed, self employed individuals are not. You are not entitled to the minimum wage in the UK if you are self employed and carry out work for a client – the wage you’ll receive will be agreed between the two of you, and it might not amount to the minimum wage if that’s what the two of you agree. This makes things more complicated if you’re self employed and haven’t been paid, because there is no set amount you MUST have been paid for work.
Employment Contract
Employees employed by an employer in a traditional sense will have a written agreement laying out their rights as an employee, including the compensation they receive for their work and any sick pay they’re entitled to when taking time off work. This contract of employment is a legally binding document that ensures an employee will be paid the agreed amount per hour/day/week/month (depending on the contract). When an employer fails to pay the agreed amount, the employee is once again protected.
When you’re self employed, there often isn’t a contract in place – although there should be (more on this later). Plenty of self employed individuals carry out work based on verbal contracts that are formed in a similar way to this:

client gets in touch to describe the work they need completing
self employed individual provides a verbal quote for the work
negotiation may or may not take place
both parties verbally agree to the money that will be paid
the work is completed
the money is then paid

 
Whilst this method works just fine for trustworthy clients, you do leave yourself open to a legal grey area if you need to take legal action later down the line and can’t prove the agreement you and your client came to in writing.
Employment Tribunal
Another key protection for employed individuals is an employment tribunal. When things go really wrong and an employed person’s contract of employment is terminated, employment tribunals exist to challenge that decision if the individual deems the decision unfair. You can take your employer to an employment tribunal if you have been fired and not been properly paid for the work you completed. An employment tribunal will follow this broad structure:



Claim Form Submission
The employee will submit a claim form detailing the reasons for the claim.


Defence
The employer must then respond to the claim within 28 days.


Assessment
Both arguments will be reviewed to determine what happens next.


Preliminary Hearing
If a claim is deemed viable a preliminary hearing will soon take place.


Remedy Submitted
The employee will then be given the opportunity to explain what restitution they are looking for.


Settlement Discussions
Both parties will enter negotiations to see if a settlement can be agreed upon.


Judicial Mediation
If neither party can agree, an independent judge will hear the case.


Full Hearing
A full hearing will then take place with all relevant evidence being heard.


Remedy Hearing
Here the remedy for the employee will be given.


Dispute
Both parties will then have a right to appeal.



UK self employed workers, however, do not have this same claims procedure in place and are usually unable to submit a claim to an employment tribunal. They can make a claim in other ways, which we will cover in greater depth below, but they don’t benefit from the tried and tested structure of an employment tribunal.
Trade Union
If you’re employed through traditional means as a UK worker then you will have the option in many workplaces to join a trade union. Trade unions exist to protect worker’s rights and support those trade union members when things go wrong. You’ll also benefit from having a trade union representative in all meetings with your employer, so if you haven’t been paid correctly, the representative can join you in a meeting with your employer and support a resolution.
If you’re self employed, you can’t join a trade union in the UK, and therefore will have to fight your battles alone if you haven’t been paid correctly or at all.
Thankfully, we’re here to support you today – our next section will detail what to do if you’re self employed and not been paid.
I’m Self Employed And Not Been Paid For Work Completed – What Should I Do?
When you’re self employed and not been paid, it’s easy to panic and assume you’ve simply lost out on the money you rightly deserve for your work. But don’t worry – just because you don’t quite have the same protection in employment law as traditional employees, doesn’t mean you’ll lose out on your pay entirely. Here are some practical tips to hopefully ensure you get the pay you deserve:

Contact The Debtor Kindly
The very first step in securing your pay is contacting your debtor – but in the kindest way possible. It’s obviously a very emotional time for you and you might be worried that your client is deliberately avoiding paying you, but honest mistakes can happen too and it’s more likely that this is the case and there’s a genuine reason for their nonpayment.
Contact your client and kindly remind them about any unpaid invoices that are outstanding. If they’ve simply forgotten, they’ll probably send you the money instantly and you no longer need to worry.
Even if they aren’t willing to pay right now, you’ll be able to get some information from them as to why. Perhaps your work isn’t satisfactory, and you could offer to make amends. Or maybe they are having money problems as a business right now and might request an extension.
Whatever the case, start by contacting your client directly and see if an arrangement can be made where both parties are happy.
Threaten Further Action
If your client refuses to pay, doesn’t get back to you, or is otherwise being difficult to deal with, then you can threaten them with further action as a last resort. By threaten, we really mean notify them of your intention to take legal action. There is no need to be threatening with a letter of this nature.
Small claims court is the main legal avenue you have available to you if you are self employed and not been paid. Before you start the small claims court process, though, you should simply send them a letter outlining your intention to seek legal action if the problem isn’t resolved satisfactorily.
Your letter should include the following details:

your personal information
the circumstances leading up to the letter
what you’re hoping will happen beforehand
the money owed and how you’ve calculated it
a reply deadline – 2 weeks is standard
a warning that court proceedings will begin if a reply is not received

 
This covers your back from a legal standpoint, but also lets your client know what to expect.
Contact Debt Collection Experts
Whilst you can begin legal proceedings via the small claims court yourself, there is another option open to you if you prefer.
Using a debt recovery or debt collection agency can be a great option. Usually they’ll charge a small fee for their work and court costs – which could be requested upfront, or simply deducted from the claim amount received when you’re successful.
Whatever the case, you can leave it to the experts if you prefer.
Wait For Your Case To Progress
Whichever route you choose, you’ll need to wait for your case to progress further. Be patient during this time and don’t be tempted to contact your debtor. You don’t want to cause any aggravation and it’s best to let the courts/debt recovery agency do their job.
If you’re successful, you’ll then receive the money you’re owed less any fees.
How Can I Stop This Happening Again? Useful Tips For The Self Employed
If you’re here then you’ve probably already had the misfortune of being self employed and not being paid, but hopefully the following tips will protect you in the future:
Always Use A Contract
Although it’s often easier to go without a contract, one that clearly sets out, in writing, the exact nature of the work being carried out and the payment terms, can really protect you in the future if somebody decides to not pay you.
Unpaid monies can be retrieved much easier in courts and via debt recovery experts if you have a written contract that proves you’re owed money.
Look up self employed contract templates online as a good starting point if you’re unsure where to begin.

Ask For Part Payment Upfront
When you work with a new client you have to build trust. They need to learn to trust that you’ll do the work to a high standard, and you need to trust that you’ll get paid.
One way of building that trust in the beginning is by asking for part payment upfront with the rest to be paid on completion of the work. Many clients will be happy to do this to build trust – especially if you explain that you’ve dealt with nonpayment before.
Set A Strict Payment Date
In your contract, and when you first speak with a new client, you should make it clear exactly how much you will be paid and when that payment is due. Setting these payment terms ensures you can prove that your client is late come pay day.
If you set strict payment dates and those dates are then missed, you’ll be able to clearly show that you’re owed money if you take court action against your client.
Final Thoughts
Proper pay is important for any employed individual, but especially so for self employed individuals who are responsible for their own tax and national insurance payments and who need accurate records of the work they’ve completed and they pay they’ve received for it.
When clients refuse to pay for your services, you should know that you have every legal right to start court proceedings or try to recover the debt you’re owed via a debt collection agency. You shouldn’t just let it slide. You’re entitled to be paid for the work you’ve completed, no matter the nature of your employment.
Follow the advice in our guide and hopefully you can recover the money you’re owed and prevent it from happening to you again.
The post Self Employed And Not Been Paid – What To Do appeared first on Real Business .