A ‘contractor’ lost me money. Do I have to pay him?

Dear Aunty B,

We had an employee leave at the end of last year with a project still in production that he was responsible for and was the only person who could deliver it. He wanted to cease being an employee and be a contractor instead, which I had agreed to in principle.

By the time he had “officially finished” with the company, the project was way over budget and he had agreed to complete it before his departure as he was going on holiday straight after.

He left and wasn’t able to be contacted for around six to eight weeks. This left us with an unhappy client, an invoice that couldn’t be paid until the job was complete, and with us left to pick up the pieces. I withheld his final pay because of the deal that we had agreed to and the fact that he hadn’t finished what he said he would.

He then returned, proceeded to tell us what a wonderful time he’d had on his holidays, and was ready to get back to work. We went through everything again that was on the list to be completed, he agreed (once again) to start the very next day – and then vanished again!

I proceeded to source an external provider to complete the works, and after a couple of false starts finally found someone to do the work. By now though, five months had passed, and when I told the client that I had found someone, understandably they decided to pull the project and not let us finish it.

Even worse, they said they wouldn’t pay our final bill which was 50% of the job, even though 80% was complete. But who was I to argue after all we had put them through. We do other work for them, which they were happy to continue with us, but not this particular job.

This week, the “contractor” contacted me (another month later) asking if we were ready to go with “finishing the project”. I told him that it was too late and the client pulled it. After my response, he sent me another email asking when he would be paid his outstanding money. I don’t want to pay him, for the obvious reasons of the money it cost us in lost revenue. But I understand that there could be a legal obligation here.

What should I do?

Fed up,
Vic

Dear Fed Up,

I read this out to the employees in our office and asked their opinion – if they were in the contractor’s shoes should they get paid?

They agreed that the employee deserved something and it was this; dog poo left in a flaming paper bag left on his front door step.

I could have put it differently, but why bother? It expresses my sentiments exactly. He almost cost you a client.

And don’t worry about legal obligations. He’s not likely to sue. Oh, and if he whinges, just tell him that if you pay him, the tax department could well be very interested in why he wanted to become a contractor and not an employee.

And take that very nice client out to a very big lunch.

Your Aunty B.