HR · 28 June 2017

Has my freelance contract been ended unlawfully by my client?

freelance contract
If a client decides to prematurely end its relationship with you, what rights do you have as a freelancer?

Following the end of David Walker’s freelancer series, the Grid Law founder responds to a pertinent question from one concerned reader who fears their own freelance contract was unlawfully cut short by a client.

Question

I’m a freelance graphic designer working from my own office and have been trading as a limited company for 20 years.

I have serviced a major publishing client for the last 18 years, to the point that year-on-year, I was totally dedicated working 24/7 for this client.

My design contract was due to be renewed in December 2017. The contract set out a structure for design fees only, but none of the points or conditions as set out in your article.

In 2015, my client was acquired by a large publisher and all design work taken in-house. My freelance contract was not re-negotiated, other than an email I received from the new owners which stated “we wish to continue a working relationship”.

However, it was soon clear that the “working relationship” was only to call in all outstanding work-in-progress (WIP). As soon as all WIP had been completed and supplied, new work dwindled to currently only one project received this month.

This nightmare has devastated my family and myself – it feels I’ve effectively been sacked overnight, with no compensation, no rights, and nothing for the dedicated 18 years service working 24/7.

Therefore my question is, is it legal to be treated in this manner, and do I have any rights?

Thank you in advance for your guidance.

Answer

This is a common issue when someone has worked for a client for a long period of time, often exclusively for one client.

My previous article gave some guidance on this, but there are many other points to consider too and we would need to have a much closer look at the relationship between you and your client to make a decision on this.

This is an important distinction to make, as an employee will have far more rights against being unfairly dismissed than a freelancer. An employee has a whole body of legislation to protect them whereas a freelancer only has their freelance contract to rely on.

In your situation, there is another point to consider as you have been providing your services through a limited company.

If you are considered an employee (if that is what you want to argue), your company may be a personal service company. If it is, you will also need to consider issues such as IR35, and whether sufficient tax and National Insurance Contributions (NICs) have been paid.

Next we need to look at your contract. Was your client obliged to give you any amount of work?

If not, and you accepted the financial risk of this, this may indicate you were more likely to be a freelancer. If there was an expectation of regular work with less financial risk, then this may be an indication of employment status.

On what notice could they terminate the agreement? If there is no notice period in your contract and you are a freelancer they should give you reasonable notice.

However, what you and they consider to be reasonable may be very different. If there wasn’t any obligation to provide you with any work then the notice period is less important anyway.

If you are an employee and they no longer need you, this could be a redundancy situation and they should have given you notice through a proper consultation process. Were any other employees made redundant when your client was taken over?

Next, we need to look at your client being purchased by the other company. Does the original company still exist?

If you are a freelancer, was your contract properly transferred to the new company or was a new contract formed? If you were an employee, should there have been a TUPE transfer of your rights?

At this stage, I have more questions than answers, so you should probably take proper legal advice on all of this before making a decision on what to do (you may also want to speak to your account about possible tax and NIC liabilities if you are an employee with a personal service company).

However, I hope this has given you some guidance and some things to think about.

Catch up on the freelancer series:

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ABOUT THE EXPERT

David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry – advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.

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