about PO/Project cancellation compensation/penalty
Thread poster: Boffin Inc

Boffin Inc
Canada
Local time: 03:26
Member (2008)
English to Chinese
+ ...
Apr 30, 2009

Dear colleagues,

I would like to have your opinion about compensation/penalty for PO/Project cancellation, no matter you are a translator or represent an agency. I want to collect opinions and decide our policy for dealing with such issues.

Let me tell the story first. :0)

Recently, we got a few projects cancelled by some of our clients because of various reasons, I think it is common recently considering the recent world economy recession, though such things are really frustrating and awkward for us. Some of the projects are just forecasted and cancelled before the starting date and causes not much damages. But there were projects cancelled after we started working - we received client confirmation to start project and we assigned project to translators and proofreaders, and issued POs to them. When the client told us that the project cancelled, due to their marketing plan change, we already had some progress. We told the translators about the bad news and told them to stop and that we will pay thenm for what have been done. Most of them accepted the solution and show understanding because such things are really out of our control.

But there was once one freelance translator who was assigned as proofreader expessed different opinion. Though he has not started proofreading (the job was cancelled 3 days before the first batch for proofreading), he told us that he spent a couple of hours in preparing the job(we agreed to pay him for these hours), and preserved the time slot (which we don't think we can pay), and asked for a 15% of PO value. Though finally he agreed to accept compensation for the hours of his preparation only, I feel it necessary to make it clear for future projects. So I come here to collect opinions first. (Personally, I can somehow understand him as he had bad luck recently because another client of his happened to cancelled a project just a few days before, maybe that's the cause of his claim)

What is your opinion about the following questions:
1. Should the translator be compensated if a forecasted project is cancelled before the starting date? If yes, how should he/she be compensated?

2. Should the translator be compensated if a project is cancelled before the starting date, w/o issuing the PO? If yes, how should he/she be compensated?

3. How should the translator be compensated if a project is cancelled at the beginning/halfway after it is started and he/she received the PO? Should the indirect losses/opportunity cost (like rejecting other client's project due to conflicting date) be compensated?

4. Any suggestion for dealing with project/PO cancellation? Thank you!


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Marie-Hélène Hayles  Identity Verified
Local time: 09:26
Italian to English
+ ...
Opinion of a freelancer Apr 30, 2009

1. Should the translator be compensated if a forecasted project is cancelled before the starting date? If yes, how should he/she be compensated?

No, I don't think so - as far as I'm concerned, no offer is definite until I've had the confirmation (whether as PO, or an e-mail saying go ahead, or whatever). I certainly wouldn't consider my time as booked, meaning I'd consider myself as free to take on other projects in the mean time.

2. Should the translator be compensated if a project is cancelled before the starting date, w/o issuing the PO? If yes, how should he/she be compensated?

As for 1 - if the job hasn't been confirmed, then no compensation is called for.

3. How should the translator be compensated if a project is cancelled at the beginning/halfway after it is started and he/she received the PO? Should the indirect losses/opportunity cost (like rejecting other client's project due to conflicting date) be compensated?

This is a much more complex question. The translator unquestionably has the right to be paid for any work already done on the job. Any further compensation would depend on the project's length, I think. I normally work on fairly small jobs taking no more than a couple of days at most, so I can easily find other work to replace a cancelled job, and I certainly wouldn't ask for any compensation beyond payment of whatever I'd already done.
However, in the case of someone habitually working on long projects, a cancellation could be far more serious. I have no experience in this kind of market, but I imagine that it could be very difficult for someone like this to find replacement work if, say, a project booked in for the next three months suddenly got cancelled after a couple of weeks. In this case, I think some kind of additional compensation is only fair; how much, I'm not qualified to say, but in any case it's something which should be discussed and agreed with the translator, in writing, before the project even starts.


[Edited at 2009-04-30 11:34 GMT]


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Morten Rindsig  Identity Verified
Denmark
Local time: 09:26
Member (2007)
English to Danish
+ ...
Compensation Apr 30, 2009

This is my view on this topic being a freelance translator.

If you are a freelance translator is you are basically running a business!
This means that unless specifically told to perform any form of preparation by your customer, you cannot be compensated until you receive the order (whether by PO or e-mail or otherwise). The time you might have used preparing is a cost you have to cover yourself by including this in your general rates or otherwise. My answer on question 1 and 2 is "no".

If a PO/order has been issued, the translator should be compensated for the total amount but not for any indirect losses. Indirect loss is a risk you have when you run a business.


[Edited at 2009-04-30 12:20 GMT]


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Kathryn Litherland  Identity Verified
United States
Local time: 03:26
Member (2007)
Spanish to English
+ ...
work completed Apr 30, 2009

1. Should the translator be compensated if a forecasted project is cancelled before the starting date? If yes, how should he/she be compensated?

No

2. Should the translator be compensated if a project is cancelled before the starting date, w/o issuing the PO? If yes, how should he/she be compensated?

No

3. How should the translator be compensated if a project is cancelled at the beginning/halfway after it is started and he/she received the PO? Should the indirect losses/opportunity cost (like rejecting other client's project due to conflicting date) be compensated?

Only for work completed.

On the one hand, I do sympathize with the translator who winds up making less than anticipated and with a big black hole on the calendar. But I don't think the client owes any additional compensation to the freelancer for that inconvenience. This is not really a legal argument, but it seems to me to fall under the category of "#$%& happens," and one can't/shouldn't go around looking for someone else to foist the blame and liability on when #$%& happens.

On the other hand, out of human decency, the kind thing to do would be to look for ways to indirectly boost the slighted translator--trying to send more business their way, or writing them a WWA or a note of recommendation for their files, for example. In the long run, I think a strong, loyal, cordial relationship between customer and supplier is one of the most valuable assets you can have, whether you're the customer or the supplier!


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Boffin Inc
Canada
Local time: 03:26
Member (2008)
English to Chinese
+ ...
TOPIC STARTER
Thanks, but want to make it clearer Apr 30, 2009

Morten Rindsig wrote:
If a PO/order has been issued, the translator should be compensated for the total amount but not for any indirect losses. Indirect loss is a risk you have when you run a business.


[Edited at 2009-04-30 12:20 GMT]


Hi Morten! You mean "the total amount" of what has been done, right? Or you mean "the total amount" of the whole PO? Just feel free to let me know, I do want to know how other people think of such things.

[Edited at 2009-04-30 13:25 GMT]


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Morten Rindsig  Identity Verified
Denmark
Local time: 09:26
Member (2007)
English to Danish
+ ...
Compensation for work Apr 30, 2009

To elaborate on my answer of question #3:

In my view the translator must be paid the total amount of the PO, if - and only if - the translation/editing has already been done and delivered to the client. This is the case even if the customer (the translation agency) does not have a matching clause with their end customer. The latter is 100% a matter between the translation agency and their end customer and payment to the translator is not affected by that.

If the work has not yet been delivered to the translation agency, it is a matter of negotiating a compensation less than the total amount on the PO, which is considered fair to both parties. It is difficult to define a general rule to exactly where this split should be made.


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RobinB  Identity Verified
Germany
Local time: 09:26
German to English
Agree with most other responses so far Apr 30, 2009

Writing as a translator and specialised translation company owner:

Boffin Inc wrote:
1. Should the translator be compensated if a forecasted project is cancelled before the starting date? If yes, how should he/she be compensated?


No. Customers don't pay compensation either. Cancellations happen, quite frequently, and it's just part-and-parcel of the business, no matter if you're a freelance or an LSP.

2. Should the translator be compensated if a project is cancelled before the starting date, w/o issuing the PO? If yes, how should he/she be compensated?


No, as for 1.

3. How should the translator be compensated if a project is cancelled at the beginning/halfway after it is started and he/she received the PO? Should the indirect losses/opportunity cost (like rejecting other client's project due to conflicting date) be compensated?


If the translator has actually started work, or a reviser has actually started revising, then that work must be compensated by the end client (who of course is entitled to the work). It's rare in any industry to find a contact with a penalty clause that allows the service provider to claim compensation for work that hasn't actually been performed or expenditures that haven't actually been incurred. Opportunity costs are not compensated - again, that's a standard business risk, as is the risk that a project is cancelled at any stage. In most cases, though, both end clients and LSPs will try to channel other work to the translator because they understand that the translator has made themself available to do the work. End clients and LSPs who don't at least try to do this should expect translators to walk away from them at some point.

4. Any suggestion for dealing with project/PO cancellation? Thank you!


See above. Otherwise, just move on. Lots of work out there...

[Edited at 2009-04-30 13:45 GMT]


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Boffin Inc
Canada
Local time: 03:26
Member (2008)
English to Chinese
+ ...
TOPIC STARTER
I think we have the same opinion. Apr 30, 2009

Morten Rindsig wrote:

To elaborate on my answer of question #3:

In my view the translator must be paid the total amount of the PO, if - and only if - the translation/editing has already been done and delivered to the client. This is the case even if the customer (the translation agency) does not have a matching clause with their end customer. The latter is 100% a matter between the translation agency and their end customer and payment to the translator is not affected by that.

If the work has not yet been delivered to the translation agency, it is a matter of negotiating a compensation less than the total amount on the PO, which is considered fair to both parties. It is difficult to define a general rule to exactly where this split should be made.



I totally agree that if the translator has delivered the job, 100% should be paid. That's what we do. I think this still comply to "compensate only what has been done".


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Catherine Brix
Local time: 09:26
Swedish to English
+ ...
Of course the translator should be compensated! Apr 30, 2009

If I make an appointment to have my hair done and cancel the same day, I have to pay full price anyway.
If I make an appointment to fill a cavity or have my teeth cleaned and cancel the same day, I have pay in full anyway.
None of these service providers have provided a service but they reserved time to care of me and because I cancel on short notice, I have to pay in full.
So why shouldn't a translator warrant the same respect? We are most certainly held accountable for shortcomings on our side, and expected to generously concede one discount after the other.
Time's money. My time is just as valuable as the other guys. I'm in business; this isn't a game, this isn't a hobby. I make my living this way and I expect to be treated with respect and paid for my time.
/Catherine


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Andrea Appel
Canada
Local time: 03:26
English to German
+ ...
Outsourcing mostly Apr 30, 2009

I agree on everything with Marie-Hélène Hayles, Robin, Kathrin and Morten.

It shows respect for mishaps which also can happen to a translator.

Sometimes they cancel the project right in the middle or don't deliver because they had to go to the hospital on the day of the project delivery. Then what?

The company looses the client for good! NO COMPENSATION from the translator please correct me if I am wrong.

I think it is a two way street were we just have to look at each other in a human way.....things happen in life and mutual respect is what we should look for.

I do agree for the compensation of work being done yes.

The time issue before any work was done; NO----
nice apology and sending the next assignments towards their way.

Kind regards,
and good luck


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Katalin Horváth McClure  Identity Verified
United States
Local time: 03:26
Member (2002)
English to Hungarian
+ ...
Let's see the ATA model contract May 1, 2009

The ATA provides a model contract that many freelancers use to create their own agreements:
http://www.atanet.org//careers/model_contract.php
It has a paragraph specifically about cancellations:

3. Cancellation or withdrawal by Client.
If Client cancels or withdraws any portion of the item(s) described in paragraph 1 above prior to Translator's completion of the service(s), then, in consideration of Translator's scheduling and/or performing said service(s) Client shall pay Translator the portion of the above fee represented by the percentage of total service(s) performed, but in any event not less than _____% of said fee.


(Paragraph 1 is the detailed description of the project, pretty much the same info as a PO.)

It is not unethical and not uncustomary at all to require compensation in case a confirmed project gets canceled, and the compensation may go beyond the portion that was actually translated.

I use an agreement based on this model contract for larger projects, that take several days or weeks to complete. I normally write 50% on that line.

I had to use this clause only once so far, when an agency decided to cancel the project that I already started working on, and give it to another translator that promised faster delivery - they said it was necessary as their end client changed their mind about the final deadline. When I reminded them about this clause, they quickly found a way to renegotiate with their client, and I could finish the project.

So, as other have said, freelancers are running a business, and a confirmed, scheduled project means the time is blocked off, other projects are rejected, so a cancellation is lost income. This is not part of "normal business risk" that we just have to absorb. It is a risk that can and should be mitigated, by specific agreements with our clients.

In my opinion, agencies should have similar agreements with their end clients, for exactly the same reasons. If they don't, that is their own decision, but then it means they are willing to absorb the risk of having a project canceled, but still having to pay the translators. I believe translation agencies have (or should have) their rates set so the difference between what they pay for the translators and what they get from the end client covers all of their expenses, including dealing with this specific risk.
Of course, another way of dealing with this risk without using such agreement is to have very high rates - but agencies and end client probably don't want that, and unless they are notorious cancelers, I assume they would rather go for a contract with such a clause about cancellations rather than paying a higher rate on the entire project or all the time.

Katalin

[Edited at 2009-05-01 03:32 GMT]


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Mads Grøftehauge  Identity Verified
Local time: 09:26
English to Danish
+ ...
Depends on your mutual arrangement beforehand May 1, 2009

1/2)
Marie-Hélène has a good point about 'forecasted jobs'. It can mean different things to different people (freelancer/agency). There really should be no such thing as bookings, only inquiries. If an agency calls me up and asks me to "book two months in July and August for a big project" they often actually mean that if and when that jobs comes around, they expect me to take it on. But on my hand, I just lets them know if I have any holidays booked, and I note down a possible job. It's my responsibility to make it absolutely clear that I'm not blocking my calendar for that time. I am free to take on any other work. If they want me to be definitely ready to start come July 1, we need to agree on a cancellation fee.
No compensation clause = no future booking.
I have learned this the hard way, and the agency that burned me can no longer get me to take on the less juicy stuff with cramped deadlines etc. That's only fair; if I had gone back on a promise to them, I'd fully expect them to dump me entirely.

3) A PO without a compensation clause is not much better - it's really just a formalised statement detailing the work and the deadline. Katalin is right there. But it's quite common that the PO/start of work represents a boundary line: cancellations mean agencies pay for work done, and freelancers lose the same amount if they cancel. Surely no agency asks for compensation if a freelancer can't make a deadline, right?

Mary Catherine's example with hairdressers and dentists illustrates my point (if not her own): I don't pay my hairdresser and dentist if I miss an appointment - it may be common in Sweden, but not here in Denmark. However, I do know that some more upmarket/uptight establishments (or those whose clientele are notorious cancellers) have various special clauses about late cancellation...

Finally: no, freelancers do not know what is and is not within the agency's control. They may very well have a late cancellation clause with the end client - and pocket that money. I'm just saying that's a possibility. We don't know what rates the end client pays either, nor the agency's expenses for rent and stationary etc...

Yours,
Mads G


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Daina Jauntirans  Identity Verified
Local time: 02:26
German to English
+ ...
Do you really pay in full for work not done? May 4, 2009

Mary Catherine Brix wrote:

If I make an appointment to have my hair done and cancel the same day, I have to pay full price anyway.
If I make an appointment to fill a cavity or have my teeth cleaned and cancel the same day, I have pay in full anyway.


Maybe this is the case in Sweden, but certainly not in the United States, and I didn't experience this in Germany, either.

I agree with those who said payment is owed only for the portion of work already completed after the PO is issued. All of the scenarios above have happened to me, and this is how I have been paid. I think it's fair.


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Erzsébet Czopyk  Identity Verified
Hungary
Local time: 09:26
Member (2006)
Russian to Hungarian
+ ...
question Nov 6, 2009

Katalin Horvath McClure wrote:

I use an agreement based on this model contract for larger projects, that take several days or weeks to complete. I normally write 50% on that line.

I had to use this clause only once so far, when an agency decided to cancel the project that I already started working on, and give it to another translator that promised faster delivery - they said it was necessary as their end client changed their mind about the final deadline. When I reminded them about this clause, they quickly found a way to renegotiate with their client, and I could finish the project.

So, as other have said, freelancers are running a business, and a confirmed, scheduled project means the time is blocked off, other projects are rejected, so a cancellation is lost income. This is not part of "normal business risk" that we just have to absorb. It is a risk that can and should be mitigated, by specific agreements with our clients.

In my opinion, agencies should have similar agreements with their end clients, for exactly the same reasons. If they don't, that is their own decision, but then it means they are willing to absorb the risk of having a project canceled, but still having to pay the translators. Katalin

[Edited at 2009-05-01 03:32 GMT]


Dear Katalin, I completely agree and thank you for sharing this useful information with us.
I am in the same situation now, but the project is canceled ...due of my illness and hospitalization. The client is not mine, the job was assigned to me through an agency. Finally the client was so generous he offered me a payment for job done to the deadline. What should I ask for?


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John Rawlins  Identity Verified
Spain
Local time: 09:26
Spanish to English
+ ...
Paid in full for cancelled project Nov 6, 2009

Two weeks ago I was booked by a management consultancy in Spain to do some presentation translations. At the end of the second day, they told there was no more work as their client had changed his mind about something. They told me to bill for all four days anyway. They paid by transfer a week later.

Obviously, this firm is not used to dealing with translators.


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