Unpaid tech contractor: 'I have to support my family. I have no money for medicines'

Your correspondent's inbox has never seen anything quite like this: I've received more than 50 personal emails from tech contractors affected by the “suspension” of payments by Plutus Payroll, an Australian outfit that pays tech contractors. Register stories get lots of comments, but this level of mails direct to a journalist …

[Anonymous Coward]

There but for the grace of god...

As a contractor myself, hence rather remaining anonymous, I can only say, "yikes" and I really feel for those guys. I'm with one of the mega-"body shops", so it'd take a heck of an upset for them to stop paying, but still. It's always week-to-week, so I always put something aside for reserves.

That said, in this day and age, with corporate layoffs on the drop of a hat, the advantages of job security but lower pay vs mercenary with high pay has shifted towards the latter. Meaning, you have true job security in neither, but as contractor you're at least pulling in the $$$.

[Anonymous Coward]

Re: There but for the grace of god...

I count my blessings I was able to get established enough in my career to no longer have to deal with consultant gigs and got direct hired by a company I couldn't love more or be more loyal to (no layoffs except to companies acquired in its fairly long history). Boomers are really screwing over the millennials all around. Plus they are buying into this gig economy BS as well. Believe it or not there are still good companies to work for but they are definitely the minority and take some patience to find.

[Anonymous Coward]

Re: Boomers are really screwing over the millennials

In my experience, it's almost the complete opposite.

[bon_the_one]

Why we love El Reg

I think this is superb. Sim using his contacts to help people who are in the poo through no fault of their own. Sims trying to dig through the said brown stuff to get answers.

Respect.

[hplasm]

Re: Why we love El Reg

Thanks El Reg!

I'm not affected by this, but I bet those that are are grateful for your help.

[Dan 55]

"We have responsibly declined to suspend business activities due to our commercial dispute...

... which prevents us making payments"

That's remarkably easy to say when you're not the one who's not getting paid.

[Mark 85]

Re: "We have responsibly declined to suspend business activities due to our commercial dispute...

The concept of "dispute" makes me raise my eyebrows. Back about 20 years ago I did the "contractor" thing (but on the engineering side of thing). I got out of that gig because suddenly there was a "dispute" and no one got paid. They danced like this for 2 weeks until it came out that the owner had cleaned out the accounts and headed off to a "safe" country. I do hope that's not the case here.

[Naselus]

Re: "We have responsibly declined to suspend business activities due to our commercial dispute...

"I got out of that gig because suddenly there was a "dispute" and no one got paid"

It's very commonplace. I started out as a contractor, because at the time if you got into IT where I was in the UK you more or less had to be - permanent jobs were only ever offered to people who'd been contracting for a company for ages (long enough to plausibly sue for employment rights). And yeah, there's a couple of dozen jobs that I simply never got paid for - including ones from massive, big-name companies who could easily afford it but simply elected not to pay me for 2-3 days work because I was unlikely to take it to court for a few hundred quid. Hell, one time, a local NHS hospital failed to pay us due to office politics between our boss and our boss's boss. Nothing we'd done wrong - just one dilbert trying to screw another one over.

That's why I gave up on contracting as soon as I could.

[amortiser]

Re: "We have responsibly declined to suspend business activities due to our commercial dispute...

At hey have headed off to the big house!!

[macjules]

Re: "We have responsibly declined to suspend business activities due to our commercial dispute...

The only people 'preventing' payments is the company itself. The doublespeak about 'sorry to see you go' etc is a standard prelude to 'we have already spent your money mate'.

[IHateWearingATie]

The wife is a contractor and the national retailer for whom she works regularly screws the payment and she finally gets the cash weeks after it was due as the accounts department mainly employs zombies from Shaun of the Dead.

As a result she keeps a good reserve as I thought was the case for all contractors? It's a bad situation to be in and they have my sympathy but I thought all contractors keep some cash in reserve for situations like this?

PS in case you're wondering, she stays working there as they agreed to part time hours that work for her and it's 5 mins from the kids school. Some months they do pay on time. Even if it's not the right amount!

[AMBxx]

Cash in reserve

Depends how long you've been contracting. When I first went self-employed ( jumped ship before company went bust), it took me a month to get a few bits of work. Invoicing terms are 30 days, often paid late.

That means I was 90 days behind on income. I was fortunate in having savings and a wife with regular work. Not everyone is in that position (through no fault of their own). Even with the higher pay, it takes the best part of a year to be 'up'.

[bombastic bob]

Re: Cash in reserve

"Invoicing terms are 30 days, often paid late."

yeah, and if you get unlucky and have a couple of "non-paying" customers at the same time, it complicates things a bit more. can happen. And yet the work is still there. So what do you do? Well, sometimes it means taking out a loan, and smiling, and doing the work, as long as there's a good chance of getting paid for it down the road. It's the world of contracting and business in general... Especially for freelancers and privateers.

yeah when you sign BOTH sides of the check, you find out a lot of things that most wage slaves don't know about, from payroll taxes to getting customers to pay up.

[JohnG]

Re: Cash in reserve

"It's the world of contracting and business in general... Especially for freelancers and privateers."

For some years, I have been sub-contracting from large companies, on frame contracts with European intra-governmental organisations - they regularly pay from three to six months late. On the other hand, these are lucrative and long term contracts.

[tedleaf]

So,exactly the same situation as when thousands of claimants don't get their jobseekers payment,but you never,ever see those stories mentioned anywhere,but as soon as it starts to happen to a few well paid folk in aus,who should have contingency savings(impossible and illegal on usa) it's suddenly news..

Cant say I have much sympathy for them,now you know how billions of poor people get treated all the time..

[Anonymous Coward]

Now, now ...

"So,exactly the same situation as when thousands of claimants don't get their jobseekers payment"

This is conflating two issues. I'm well paid and reasonably secure but it doesn't mean I lack sympathy for those who are pissed around by the government (jobseekers) or those who are pissed around by their umbrella company (as per TFA). When you have higher income, you generally have higher commitments: there's stress at both ends of the scale.

There is no moral duty to have savings, and with interest rates of approx 0%, perhaps it's not even that financially sensible. There is a moral duty to pay people for doing work --- and the smaller the entity, the stronger that moral duty is: I worry less about being late with my water bill than I do about being able to immediately pay my gardener, for instance.

The trouble with "Cant say I have much sympathy for them,now you know how billions of poor people get treated all the time" is that it looks like the politics of envy. These contractors are still working for a living and should be paid the market rate for that work. Basic compassion should tell us that they are in a very difficult situation without us having to immediately go for the "fallacy of relative privation"

[Manolo]

Re: Now, now ...

"There is no moral duty to have savings, "

Of course there is a moral duty to have savings. It follows from the moral obligation to be able to provide for your family.

Even though my job is pretty secure I maintain a minimum of three net monthly wages as an absolute minimum of readlily available savings (i.e. not tied up in stocks or bonds).

And I am not saying you can build up such a reserve overnight, it takes some time and mainly financial discipline.

[Anonymous Coward]

It is possible to feel for both.

[Richard 81]

"It is possible to feel for both."

Of course it is. There are those who'll call you a champagne socialist for it though.

[ZorgonsRevenge]

This is a bloody awful attitude.. If it was not for all those hard working contractors THERE WOULD BE NO BENIFIT paymanets to ANYONE!

We create the cash, the government ( who have bugger all to do with creating the cash ) takes a portion and gives it to people that dont work and watch Jeremy Klye all day.

You should be on your knees thanking us for working so hard!

[Lee D]

I lack sympathy, somewhat.

Either you have a contract with that company that they'll pay within a certain time, and you should be working to the maximum of that window. Or threatening them with collection if they don't pay on time as per the contract.

Or you have a contract that doesn't say a word about payment schedules, which means you have almost no fallback without going to a court and proving they were unreasonable (which will cost you more than it's worth).

Though they haven't declared bankruptcy, a "commercial dispute" could easily mean their suppliers have turned off all their IT because they haven't paid, or the bank has shut their account for similar reasons. Just because they haven't declared bankruptcy YET doesn't mean they aren't in serious trouble. Especially if they can't tell you what's happening.

But, this is the risk of self-employment, which is more an opt-out from all kinds of employee and income protections (which still don't save you if you the company goes bankrupt, by the way!). There's a reason you "get paid more" - because you need a reserve of cash, have to fight your own battles, etc. which employed people get paid for them.

Yes, I've been self-employed. For 10+ years. Made a good living out of it, and I gave it up not for any reason relating to not being able to live off it, or being screwed over (I never used an umbrella company, though, but also never had a non-paying client - because a non-paying client isn't a client, they are a debtor). But if a client doesn't pay, you stop working for them and move on. If your umbrella company doesn't pay, you do the same. Pretty much, the excuse does not matter.

In fact, being self-employed, are you not perfectly able to approach your clients direct and ask them to employ you through any other umbrella or even directly? I'm not guaranteeing they'd even consider it, but if you're any good, they'll be glad to hear it surely? And if not, that's the price you pay for freedom of employment like that.

When you choose to opt out of being tied to particular company, client, job, task or obligation that you don't like, this is your price to pay for that flexibility and freedom - though nobody deserves to have their money withheld.

However if you want that freedom and then go back and tie yourself into a company to get the amount of work you need, surely that's the worst of both worlds - absolute reliance on a company that has no obligation to push any work your way? And to not have sufficient reserves to tide you over that is unrelated to self-employment at all - it just means you've not saved for ANY eventuality.

[Anonymous Coward]

Re: I lack sympathy, somewhat.

I'm not going to comment on financial reserves - not all contractors make out like bandits.

However, all contractors need to really read the contracts they sign before signing up with one of these outfits.

I've recently had to spend an entire weekend poring over a 23 page (boiler plate) contract with some truly remarkably clauses. My objections & feedback ran to 2 1/2 pages.

I have a funny feeling that a lot of people who contract with the agency I'm dealing with have probably just signed the damned thing and have no idea what they've just done.

[Gordon Pryra]

Re: I lack sympathy, somewhat.

"this is your price to pay for that flexibility and freedom"

Flexibility and freedom??? Listen to the person who has no idea about the subject they are talking about.

I work alongside people who are "contractors" because they cant get any decent full time jobs.

They are FORCED to either become self employed or go through a payments company. the alternative is a lackluster job on close to the minimum wage for qualified technical work.

I don't see any flexibility and freedom for them, I don't see them earning enough to be able to handle a week without income let alone a month or 90 days. I do see them doing the shitty jobs and taking crap from managers that a "full time" employee wouldn't dream off.

Even people slightly higher up the tree who contract hate "bank holiday month"

They are the NORM when it comes to contracting (at least in the UK, I cant see if the person i am replying to is from here, to be honest, his wall of text and total lack of any empathy reads like the daily mail,so I guess he is)

[Lee D]

Re: I lack sympathy, somewhat.

So it's either they can't handle a single week without income and thus risk debt and maybe even bankruptcy (or literally not being able to go into work the next day!), or they have to accept lower monthly wages spread over a year with longer guarantees of employment in a job they don't enjoy?

Isn't that simple economics? I cannot walk out the door without it immediately impacting my next employment, but equally my employer can't kick me out without justification and consequences. Self-employment is exactly the opposite of that. I didn't say that either situation is nice, but they VOLUNTARILY opted-out of the guarantees because they don't want to work the lower-paid jobs. Per-hour they earn more, but they have VOLUNTARILY gambled that they won't break their leg, lose their car, get a sudden bill, or be paid late. That's NOT a sensible position for someone who is being "forced" to do that in order to earn a living, and especially not if you have no backup plan.

If you have no money, can't get a job, and the options are "go self-employed" or "take lower money", then you have chosen to go self-employed at risk to yourself and your family. Sure, you can say "but we couldn't survive on the lower money" but - guess what - it means you CAN'T SURVIVE on the higher money either, should ANYTHING go wrong. That gamble was a conscious choice, the overall situation is still no better on average.

Not only that, getting loans, mortgages, credit or even jobseeker's allowance is a lot harder if you're in -

or have come from - self-employment. There's a reason for that. Those places know your income is much more likely to be unpredictable. I was once refused a mortgage when regularly self-employed by a set number of long-term clients while earning TWICE what I was earning when properly employed (when they did grant me a mortgage without batting an eyelid).

Yes, I'm British. And I have been in this exact position you describe. That situation is a no-win, it has nothing to do with self-employment.

And I have consciously chosen - after a career in self-employment straight out of uni - to go to normal employment for many good reasons. And one of those is precisely this: When faced with the gamble, you can't guarantee it will pay off, even if the alternative situation looks worse than you can afford to take.

Hey, you have no money? I'll pay you £500 a week. Or £1000 a week but only if you spin heads on a coin - spin tails and you have to work that week for free. The offers are mathematically equivalent. If you "need" £700 a week to cover costs, can you ever really win on either option? No. One run of bad luck and you're stuffed and won't recover.

And especially if you have no savings, you cannot afford to take the gamble. Even if it's "your only option" and "forced" onto you.

[Gordon Pryra]

Re: I lack sympathy, somewhat.

Lee, you are talking as if the vast majority of people have a real choice.

Ie that there are jobs for them to talk into if they choose not to work as a "contractor"

There are not

Thus there is no choice.

Contracting is fine for people like me, but then there is a world of difference between what I class contracting and what these people are being forced into

[bombastic bob]

Re: I lack sympathy, somewhat.

"Thus there is no choice."

there are always choices. fate is what you make it. your choices might be limited by circumstance, but you can always make a choice.

In the circumstances you describe, the RIGHT choice just might be "re-location" or a career change.

[Orv]

Re: I lack sympathy, somewhat.

In the circumstances you describe, the RIGHT choice just might be "re-location" or a career change.

Both of which, inconveniently, require money.

The last time I switched jobs I spent over $3000 on moving expenses, all out of pocket. The time before that, $5000.

[Charles 9]

Re: I lack sympathy, somewhat.

"there are always choices. fate is what you make it. your choices might be limited by circumstance, but you can always make a choice.

In the circumstances you describe, the RIGHT choice just might be "re-location" or a career change.'

If all other choices lead to "death by starvation," then they can't really be considered choices owing to the survival instinct.

And moving and/or re-education presents a Catch-22. Basically, you need money to get a better job, but you need a better job to get the money you need. And many are already working every waking hour (and then some) just to make ends meet, and yet some of them STILL have to miss a few meals. Can you say, "All work and no play makes Jack a dull boy"?

[fajensen]

Re: I lack sympathy, somewhat.

And especially if you have no savings, you cannot afford to take the gamble. Even if it's "your only option" and "forced" onto you

It's that or Starve / get kicked out of the country and then starve! Often the crap cake comes with some Icing on Top: You must contract via the company preferred staffing supplier - run of course by some family of the board or crony insiders, which will be skimming off both ways.

[Peter2]

In the UK if something like this happened then you'd simply stick a case into the small claims court or otherwise do a statutory demand, whereby you show that the money is due (your invoice, and lack of payment) and they then have 21 days to either pay, or prove in a court of law that the invoice is not due. Failure to pay after 21 days means that you can have the company wound up for insolvency, or an individual declared bankrupt. Can't you do that in Australia?

Excuses about "well, we have a dispute" is not a legally valid reason for lack of payment in the UK.

[fajensen]

Similar procedure in Sweden - "Kronofogden" would be right on their ass and rightly so.

[eionmac]

value of invoice and tim einterval

To get a semi-automatic small debts court paper started, try to keep invoices below GBP £5,000. and invoice period at a maximum of 14 days. This allows an internet claim for small debts action to be made. It means your terms must include your ability to invoice when any debt due for work done is over GBP £4,500.

[Jim 40]

Re: value of invoice and tim einterval

The UK small claims limit has been increased to GBP £10000.

https://www.citizensadvice.org.uk/law-and-courts/legal-system/taking-legal-action/small-claims/small-claims/

[Anonymous Coward]

Actually believe the same is true in Australia, they do have an equivalent to the Small Claims system, as does NZ.

Biggest issue might be the level of claims, most contractors fees would exceed the maximum amount claimable under the SC system, limited to the $1-2-3,000 or so maximum (varies by jurisdiction).

Class action of some sort might be the way to go, if one can contact others in the same boat.

Should be noted, that as unfortunate as this is, it is relatively rare; most contractors get paid as agreed all the time. Bad payers get a bad reputation very quickly.

[Anonymous Coward]

Hail the new corporate overlords...

... that wants everybody to be a self-employed contractor...

Been there for ten years, but always preferred to manage contracts directly. Far easier to spot issue (and ensure pensions and the like were paid), although the bureaucracy behind can drive you mad (and you sill need to pay a fiscal expert for the most difficult stuff).

[tony2heads]

New Icon please

I suggest this before, but I want a 'Scumbag Corporation' icon (perhaps the Scumbag Steve hat)

[Charles 9]

Re: New Icon please

No, a $cumbag in a $uit (I include the $ because they should also have $ in their eyes).

[maffski]

How it made money is therefore a mystery...

My guess, from sitting on the float.

Handling payroll is something that can be highly automated so the cost base is tiny. At 1,000 contractors they'd have several million AUD coming in every month. If they can sit on that for a week or two (especially if deductions can be held for a while before paying) you can make a nice little chunk off the interest.

[Lee D]

Re: How it made money is therefore a mystery...

And when they have a bill they can't pay, they just need to sit on your money for another week to pay it.

Sounds suspiciously true.

[Anonymous Coward]

Re: How it made money is therefore a mystery...

Let's say $100,000 per contractor for argument's sake / 52 weeks * 1,000 contractors @ 5% interest / 52 weeks. So I make it that holding everyone's money for a week in a better than market average account would get them less than $2,000. Given a realistic business account interest rate.... more like $200.

So I doubt they're going to retire off the profits any time soon.

[Chris Evans]

@ 5% interest! Re: How it made money is therefore a mystery...

Do tell me where please?

0.5% or even 0.05% on instant demand accounts is common nowadays!

Also they are probably only sitting on the money for a handful of days each month.

So still a mystery to me.

[Anonymous Coward]

Re: @ 5% interest! How it made money is therefore a mystery...

It's called Treasury. You're thinking of savings accounts.

[Anonymous Coward]

Re: How it made money is therefore a mystery...

Possibly the entire scheme has been knackered by low interest rates?

So they've been sitting on the tax money for just a little bit too long, or started using it for riskier investments, eg: backing horses.

[Anonymous Coward]

Re: How it made money is therefore a mystery...

There was a Yes Prime Minister where they discussed fraud - "usually it's just a chap who gave himself a short-term unauthorised temporary loan from the company's account, and invested it unluckily. You know, horse falls at the first fence, that sort of thing" ....

[Jason Bloomberg]

Re: How it made money is therefore a mystery...

As much are people are suggesting there's some suspicious or dubious nature to the way the business worked, that it looks 'too good to be true'; it does seem to have worked quite well until they were bought out and new owners took over.

The company seems to have been fairly open about the way they raised revenue and could provide services for free; mostly by offering and promoting other paid-for services to their customers, and it seemed, surprising as it may be to some, it was a viable business model and worked reasonably well.

Then the new owners arrived.

[rdhood]

Re: How it made money is therefore a mystery...

THIS.

If I could get 52 millionaires per year to lend me $1,000,000 for a week each, set up sequentially, then I can continually earn interest on the money like I had a million dollars!

This is the way my credit union is able to offer me a free checking account... they make interest off of my direct deposit and money in the account.

If I can hold onto 1000 contractor's salaries ($2000 per week each) for a week at a time, then I essentially can pull down the interest on $2 million a year.

[Your alien overlord - fear me]

Well, in the Oz press, it seems that when an investment corp brought Plutus in March, 3 top execs left to startup their own payroll company. What's the betting, at least one of them was a signatory for the bank account Plutus uses?

[Zippy's Sausage Factory]

Sounds like a plausible theory to me.

Wonder if that company has started emailing Plutus' contractors yet? Hmm...

[Ian Michael Gumby]

@Alien ... no fear...

Sorry, but no.

When they sold the company they transferred the assets to the new company so that the new folks would be signatory for the bank account.

The issue is that the new owners appear to be shutting down the 'free' system.

As a contractor here in the US. I can tell you that if you want to succeed, you need to build at least 6 months of reserves and then some. You also need to maintain your skills so that you can get billed out for top dollar and do things that may not directly make money but also add to your brand.

Not sure how this would translate to the US.

The 'contractor' is an employee of said company (Plutus) since Plutus has to track payroll and pay the government (taxes/pensions) for the employee. The reason I say that they are employees is that Plutus would have to W2 them and not just issue a 1099 where the contractor will have to deal with the withholding, taxes, SS, etc... on their own and they could easily incorporate (S-Corp) and bill the client directly.

Thanks to Microsoft, independent contractors have to show multiple clients and can't stay at one account for more than 2 years. (Captured Employee BS...)

But I digress... back to your point...

More than likely they wanted to shut this arrangement down because while they offer the service for 'free', they could have made money by keeping the interest gained on the sweep accounts. (They are holding the money for a period of time. Think of it as a 30 day float or less.)

They also could make money by also selling contracting services and make money from the spread between what they paid the contractor and what they charged for the service.

[Mark 85]

@Ian Michael Gumby -- Re: @Alien ... no fear...

As a contractor here in the US. I can tell you that if you want to succeed, you need to build at least 6 months of reserves and then some. You also need to maintain your skills so that you can get billed out for top dollar and do things that may not directly make money but also add to your brand.

The above should be a cardinal rule for any contract worker. It's self defense and planning ahead for the "just in case..." scenario. It got me through some rough times as a contractor and some others I know.

[Charles 9]

Re: @Ian Michael Gumby -- @Alien ... no fear...

But it's hard to build a war chest when you're starting out and everything you take in JUST (and not always) covers all the expenses. Living literally paycheck-to-paycheck if not day-to-day is a lot more common than you think, and many of them have no hope of upward mobility, either.

[Anonymous Coward]

"What's the betting, at least one of them was a signatory for the bank account Plutus uses?"

After winding up my contracting business I went to work for a small start-up company with three directors. One of the directors was in charge of the business, one lived in the same city and one was overseas. I discovered that the director in charge was trousering a significant proportion of the business income and failing to keep proper records. So I reported that to the other directors who immediately sacked him.

Problem was the paychecks needed two signatures so we went without pay for a time until the overseas director could arrive.

[SimonC]

YANCOTBAC as they say.

Part of being a contractor is assuming risk. This means holding a war chest of reserve money for times of strife (these contractors could just as easily be laid off with 0 notice) and relevant insurances. I have insurances for when an agency doesn't pay me, or when I'm called for jury duty as is standard.

I can't have a great deal of sympathy for people in this situation because if I did it would jeopardise the contracting industry itself, leading to stricter IR35 regulation and all kinds of similar stuff we don't want.

If you're living paycheck to paycheck, contracting is not what you should be doing. It's like saying I'm doing fine because every time I go to the casino to gamble for next month's rent, I always win.

You always win, until you don't.

[Anonymous Coward]

"If you're living paycheck to paycheck, contracting is not what you should be doing. It's like saying I'm doing fine because every time I go to the casino to gamble for next month's rent, I always win."

Until you realize that, for many, "the casino" is the only thing available to them. AND since they're just starting out or have been forced to "the casino" from the very beginning, they had no time to build a war chest. They've been thrown into "sink or swim" situations through no fault of their own. Showing no sympathy for people in dire straits through no fault of their own immediately makes people look cruel.

[SimonC]

Nonsense. Contractors are supposed to be people with years of experience and skill, who can come into a job and hit the ground running with merely a 'here's your desk'. Any contractor with that level of skill can take a permanent position without any issues.

Some people are incompetent and/or greedy, they want to make contractor money by faking knowing what they're doing or live the so-called 'high life' while money is coming in then panicking when they're benched for months.

A contractor is supposed to be a professional. They're running a business, free of employee protections and hand-holding, and they need to act like it.

[Naselus]

"Contractors are supposed to be people with years of experience and skill, who can come into a job and hit the ground running with merely a 'here's your desk'."

That's the ideal, yes. The actual reality of the situation is that many companies hire 'contractors' to cover first line support. They're putting kids who just left high school on contract - hell, my first job, at the age of about 19, was a contract role. That's not some seasoned expert coming in and being paid top dollar for highly specialized skills. It's companies exploiting contracting in order to avoid having to offer full-time positions. I knew guys who were stuck on contracts for 5+ years in jobs that barely paid enough to feed them week to week, because there was no other options. And that was prior to 2008, during the boom years - now it's actually worse.

It's easy to look at shit like this and think 'I'm a contractor, I bill $8k a month, I don't see why they're having trouble', but actually a lot of contractors aren't really self employed by any sane measure, don't want to be self employed, and just don't have a choice in the matter.

[ecofeco]

Nice sheltered life you got there Simon. Be a shame if anything should happen to it, eh?

[SimonC]

Like what? Losing my job? Happens every 3-6 months. Being ill? Happens, war chest covers it. Critical illness? Covered through insurance. Tax investigation? Covered through insurance. Jury duty? Covered. Not being paid? Covered. Can't find a job for a year due to a terrible marketplace? Covered through the war chest.

It's like people have no idea how to be a contractor, they enjoy all the good parts but when the bad come along they cry out that it's not fair.

The clever squirrel puts away some acorns for the winter.

[Charles 9]

That's assuming you HAVE a war chest? What if you get hit hard right out of the gate or due to market pressures have to spend all you earn just to maintain, meaning there's nothing left to build a war chest and you can't negotiate for higher rates because then you get undercut and end up with NOTHING?

[Anonymous Coward]

I was contracting for about 7 years, wanted to secure a re-mortgage on a very short term, the only serious option was a permie job just for the piece of mind to protect my family and to keep the grief down from the banks. ( Isn't it fun trying to borrow money as a contractor? "How long have you been your last 3 jobs Mr X?", "Oh about 3-6 months each.", "Loan denied!!" ). Payroll companies in the main were OK but you had to constantly keep tabs on them every month to make sure they made sure your money flowed on time else it screws up your DDs like crazy. I can't imagine the stress of your "umbrella" simply telling you you're not getting paid and they don't know when must be horrendous.

( Finally coming to the end of the mortgage in a few months at long last, get some savings under my belt and get back in the contractor ring again and I can't wait! )

[Doctor Syntax]

"How long have you been your last 3 jobs Mr X?", "Oh about 3-6 months each."

Assuming you were working through a limited company in your case it sounds as if you should have answered "about 7 years". Your job is with your employer and that's your limited company. Your company's contracts may be 3-6 months. Imagine if you applied your logic to a shop employee. Would you answer "about 30 seconds"?

[SimonC]

Borrowing money as a contractor now amazed me. Santander's online mortgage tool completely understands contractors, so you start filling it in dreading stuff like "What is your annual salary?" and instead are greeted with "What were your net dividends for year end april 2017?". They know exactly what they're doing which is remarkable. I had to wait until I had 2 years of accounts though, and they apparently use the lower of the two if you only have 2 years, which was a bugger, but still pre-approved for a hefty mortgage which was nice.

[Anonymous Coward]

There's also a pretty good market for brokers specialised in contractors. It's pretty straightforward to get a mortgage as a contractor - contract stability is a well understood factor.

[72pac]

Australian banks don't care if you are a contractor...

I managed to borrow $1.25 million off ANZ as a contractor, and with the missus on maternity leave.

Aussie banks like risk I guess...

[Pompous Git]

Re: Australian banks don't care if you are a contractor...

"Aussie banks like risk I guess..."

Old saying: "If you owe the bank $100 you have a problem. If you owe the bank $100 million, the bank has a problem."

[BarryUK]

"One possible reason for the mess is that Plutus did not charge for its services. "

Ah. Getting what you pay for then?

[Jason Bloomberg]

There appears to be no evidence the company would have been in any different position if they had been charging for their services.

[spacecadet66]

Never heard of this company before but I'll sure remember that name for the future (filed under "N" for "Never Do Business").

[Stevie]

Bah!

What a bunch of mealy-mouthed, victim-blaming gits post to this forum sometimes.

My sympathies are with those who for reasons that have nothing to do with their performance of their duties are now confronted with poverty.

[quattroprorocked]

Bankrupt them?

Got a "can pay won't pay" thing going on, and they owe enough, for long enough, to make bankruptcy and option? Write in explaining that "yes, it IS personal" and then the steps required to make them bankrupt and the costs and that you will spend the money.

If they can pay, in my experience, they then do, IF they think you are serious. Because, for example, it's a point of principle not to get done over.

The extra twist in the old days was to send this to a main office fax, so the staff knew before the bosses.

And when ignored, follow all the steps, in order.

HOWEVER, if they can't pay then this all a waste of money, so choose wisely.

FWIW I always make sure I bill clients direct.

[gnasher729]

Re: Bankrupt them?

"Got a "can pay won't pay" thing going on, and they owe enough, for long enough, to make bankruptcy and option?"

There would be a huge danger for them that what they are doing would be classified as embezzlement, if they receive money from companies that they are supposed to pass on to a contractor, and they don't. If they are just incompetent and don't receive money from companies, that would be different.

[CDD]

Re: Bankrupt them?

Not sure if the law is different, but in the UK it used to be the case (and still is AFAIK) that any company that can't pay its employees - which under the terms of the umbrella agreement I understand these contractors to be - can be declared insolvent by any of the outstanding payees.

So that would be handy, I am sure!!

[Anonymous Coward]

I have limited sympathy for those affected

If it is true that "Plutus did not charge for its services" then that should have been a HUGE red flag that this is a scam - to either steal your money (which looks like has now happened) or steal your personal information and sell it to criminals (which I wouldn't be surprised victims will eventually learn has ALSO happened)

People have to bear SOME responsibility for the decisions they make. If you found a bank that charged 0% interest on mortgages would you take a mortgage from them because it is the best deal? If so you are an idiot who would deserve what you get when the scam comes home to roost, like some sort of ridiculous "fee" structure that makes it cost more than a normal mortgage, or fine print in the contract that if you're one day late on a payment they can take your house along with all your equity in it. Fortunately mortgages are well regulated (even in the US) so such onerous terms would not be allowed, which is why no one has ever heard of 0% mortgages.

Anyone who had a choice and picked this company as their payroll processor because of the great deal of "free service" is a fool who deserves their fate. The only exception to that and people I have deep sympathy for are 1) people who may have been forced to use them (in which case they probably have grounds to sue the recruiter/company that gave them no choice) or 2) this is their first contracting gig and they were ignorant of how they work and didn't realize that a payroll processor charging nothing for its services is an impossibility that is a sure sign of a scam.

I thought about posting AC since I know this will attract a lot of downvotes, but I'd rather stand behind my words than hide behind the AC label for a post I know will be unpopular with some (especially those affected who don't fall into category 1 & 2 above)

[Phukov Andigh]

wow

been "employed" by a few contractor services here in the States in the past. Fortunately never had to deal with this. Had a few direct employers in "startups" have similar issues so once I had a family, that freedom had to go away.

If the company "has money" and isn't paying out it's bills, then something needs to happen. And soon.

Preferrably something punitive to the company.

[Herby]

Strange goings on, that's for sure!

Currently I'm a contractor as well. The nice company I work for sends money to the contracting agency, and they use that to pay me and the taxes involved. The rate that my agency charges the company has to cover all the expenses, and me as well. If they want to make money, they need to charge a bit more than the total costs, so there is some "overhead" as well.

If something like that happened here in the USA, it wouldn't take long for the general public to find out, and then someone in government as well, usually ones that have keys to greybar hotels. Most states have labor commissioners whose sole function is to make sure you (the worker) aren't getting screwed over, and they come down HARD if there is some malfeasance detected. About the only way the contracting agency could get away with things, is to file for some sort of bankruptcy. Even then (I've been there) the first $2000 or so of wages is one of the "high priority" claims (sadly lawyers are higher).

Yes, I'd rather not be a contractor, but it does provide for cash flow. That is a good feature.

[Anonymous Coward]

This is why I always work directly and get paid straight into my bank. Trust nobody. And don't be a tard who has both a recruiter and a payroll company - how much cash do you want to lose? Always go direct and sign your own contracts.

[Will Godfrey]

Sad Times

Those with no sympathy had better start whistling. They could be in for a shock. Some time ago I read about a guy who through no fault of his own went from a comfortable well-funded lifestyle to homeless and penniless in a matter of weeks - sorry, I can't remember the source, but it struck a chord with a much older event.

Never disparage those fallen on hard times, no matter what you *think* is the reason.

In the late 1950s when I was a child we used to go camping in the New Forest whenever we had the chance (it was perfectly OK in those days). We got to see a tramp quite a lot, who seemed remarkably well spoken. Dad was highly suspicious at first, but the guy never asked for anything, and gratefully accepted a cup of tea, and maybe a bun from mum - who eventually got him talking.

Rather a shock for dad, was that this guy had been in Burma at the same time during the war as he was, only when he was demobbed and went home, it wasn't there. The whole area had been flattened, and he'd also lost his entire family.

Apparently he just walked away, and never stopped walking.

P.S: for the doubters. This isn't made up. I was about 9 and remember it very clearly.

[barbara.hudson]

Re: Sad Times

Get a serious illness so you can't work for a year or two, whatcha gonna do? At least if you work as an employee, the company might be able to take you back, even if it's not the same position, because you have some knowledge of the business operations (what's called "corporate memory").

A contractor? You'll probably hear the same thing as pissed-off Hollywood producers say to talent - "You'll never work in this town again!" You can't recover from a 2-year hole.

[Paul Hovnanian]

Contractors generally like the convenience ...

... perhaps.

But (in the states) practically everyone from the IRS (our federal tax collector) to unions will conspire to make your life hell if you try to contract yourself out. I like having a boss sit around and skim his cut off the top of my hourly fees just slightly more than the body cavity search that numerous gov't entities will perform should I try to make a living on my own. I'm not sure how things are in Australia. But I suspect somewhat similar.

You are an employee. Of someone. Unless you can jump through some pretty tight hoops to prove otherwise. Abraham Lincoln may have freed the slaves, but the authorities still aren't happy about seeing any of us walking around without a master.

[Winkypop]

These guys are being screwed over

I'm so glad I'm on the 'exit ramp' of my career and changing down gears.

[Potemkine]

"I am diabetic and no money for medicines"

In a civilized country such a thing should never happen . The most basic human right is the right to live, healthcare have to be accessible for all.

[pauleverett]

hang on

if your a contractor, your are basically self employed. You should put money aside for doing things like such as paying tax, unexpected expenses, or payment delays. That is also why contractors receive more money. They are meant to run their affairs as if they where a business, because they basically are, and shit happens much, which you need to be able to deal with yourself. if any contractor is living as hand in mouth as the fella in the article, they are living beyond their means, getting underpaid, or not cut out to be self employed, and should get a no risk job. Seriously, if there is nothing left after you have paid your bills, your doing it wrong, or have your head in the sand on the reality of what you are doing. You have choices. Reduce your expenses, earn more, or get a job that you can live from. If the first time you don't get paid puts on the brink of bankruptcy, your pretty much an idiot.

[Pompous Git]

Re: hang on

"Reduce your expenses, earn more, or get a job that you can live from."

Wealth consists not in having great possessions, but in having few wants. Epictetus

Works for me...

[Charles 9]

Re: hang on

"Reduce your expenses, earn more, or get a job that you can live from. If the first time you don't get paid puts on the brink of bankruptcy, your pretty much an idiot."

Or out of options. If you can't get any job that pays more than a Spartan living even if you dedicated most of your waking hours to it, and it's the best option for a significant radius, what was that adage about beggars and choice?

[JJKing]

VOLUNTARILY opted-out? Ha!

but they VOLUNTARILY opted-out of the guarantees because they don't want to work the lower-paid jobs

I have a back injury (6 prolapsed discs) and am LEGALLY required to inform any potential new employers of said injury. When I do that the job that I am so suitably qualified suddenly becomes not suited for me. Phone calls stopped being returned so no, I did not voluntarily opt-out. I was forced out by the necessity of needing to feed, house and clothe my family.

[Korev]

Re: VOLUNTARILY opted-out? Ha!

Out of interest, which country is this in? In many places you don't have to declare this kind of thing.

I hope your back improves soon.

[Colin Ritchie]

Has anyone asked this guy?

https://uk.linkedin.com/in/marcjonesatfinite

"He has most recently joined a new and disruptive payroll services company who are changing the way the industry thinks about payroll. "

Disruptive indeed.

[Korev]

Re: Has anyone asked this guy?

"Disruptive" is exactly what you don't want from the company who pays you; surely you want it to be as boring as possible!

[Martin Walker]

In more than 30 years in the industry, sometimes as a full time employee, sometimes a contractor and sometimes just running my own business I have been out of work for maybe a couple of weeks and my contract and jobs have been pretty good on the whole.

Therefore anyone with any other experience must be some sort of undeserving idiot.

I really wonder how people can be so self centered that they think in that way?

Even if you are very skilled (and obviously not everyone can be) you are going to be lucky to get through a career without grief of some kind.

[SimonC]

Problem is your point kinda defeats itself.

You acknowledge that "you are going to be lucky to get through a career without grief of some kind".

So what do you say to the person that ignores this, spends every penny they earn and lives beyond their means so they can't make rent or pay for basic necessities as soon as the tiniest problem arises?

It's a well documented and discussed problem even a political point by the labour party that small businesses (a contractor is a small business) have issues with invoice payment terms, invoices being paid late, and even invoices not being paid at all knowing they can do nothing about it.

You have to take these things into account. I can't understand why people are treating these businesses like they deserve handouts and it isn't *their* fault they didn't keep any cash reserves but instead withdrew all the profits as dividends for their directors.

I'll have sympathy if someone is benched for 12 months and runs out of cash reserves but not if they can't even survive for the same duration as the payment terms of their invoice. If you want to run a business you need to accept and mitigate risk. I'm amazed it is even deserving of a discussion.

[Charles 9]

"So what do you say to the person that ignores this, spends every penny they earn and lives beyond their means so they can't make rent or pay for basic necessities as soon as the tiniest problem arises?"

You're assuming people have enough left over to squirrel away. That isn't true for many people. They're literally living paycheck-to-paycheck (if not day-to-day) because they can't ask for more out of the market without being turned down (the only thing worse than a penny pay is NO pay), and what they get is barely (or NOT) enough to accommodate even a Spartan living. It's tough to squirrel away when you're not even making the Cost of Living and can't negotiate for higher.

[EnviableOne]

In The UK market if you have some sort of qualification, you are forced to contract, as no-one recruits direct anymore. All the entry/low-level tech roles are at least 6 months temp-to-perm. they then find some way to not take you on after the 6 months (e.g. the contract took a nose dive, you had a day off sick or the org they are sub-contracting from is taking the job back in house.)

You could try one of them jobs that dont need qualys and are direct, and get told you are over qualified, or find the needle in a pile of needles thats an SME dowing well and looking to expand on a perminant, with a manager willing to take a shot. Otherwise your only chance is that 3/6/12 month contract and the uncertainty that goes with it.

[Lee D]

Which is when you add 20% to your price to cover that uncertainty and all it brings with it.

If you have the qualification enough to be in demand, you should be negotiating a pay that you can live off.

[Anonymous Coward]

And if they turn you down for someone cheaper? Remember, the other guy can walk away if you're too aggressive, but what if aggressive is your only option? If the market price for your services is not enough to live on even by Spartan standards, you have a problem.