Agencies vs Subcontractors on Upwork: Demand Letters When Your White-Label Partner Won’t Pay
There is a very specific kind of non-payment problem that shows up once you start doing higher-value work on Upwork.
You do not work directly for the end client.
You work for another freelancer or agency who “owns” the Upwork contract.
They bring you in as their designer, developer, copywriter, media buyer, or consultant.
You deliver the work.
The end client pays them.
They do not pay you.
Sometimes they stall and say the client has not paid yet. Sometimes they claim the client is unhappy and they “cannot” pay you until they “sort it out.” Sometimes they simply disappear. In the worst cases, they keep using your work under their own brand while telling you there is no money.
This article is about that situation: white-label or subcontracting relationships on Upwork where the agency or lead freelancer gets paid but your portion does not arrive. The focus is on when and how to use a demand letter to go after the party who actually owes you money, and how to do it as a non-lawyer.
You will see how Upwork agencies really work, why Upwork will not mediate your internal agency pay dispute, what legal theories your demand letter can quietly lean on, and how to structure a letter that sounds serious without pretending to be written by counsel. There is a free template you can adapt and a detailed FAQ at the end.
The typical white-label nightmare
The pattern is remarkably consistent.
You are invited to join a project by another freelancer or an Upwork agency. They have the relationship with the end client. They position you as “their” team member or as a behind-the-scenes partner. Sometimes they add you to their Upwork agency; sometimes they hire you through a separate Upwork contract; sometimes they take the whole relationship off-platform and pay you via PayPal, Wise, or bank transfer.
Your actual work is for the end client. You may even be in meetings with that client, but the contract on Upwork belongs to your “partner.” The client pays Upwork; Upwork pays the agency; the agency is supposed to pay you. On paper, that sounds manageable.
It breaks when the agency fails to pass funds through.
You see that the end client’s milestones are being marked as “paid” or that the project continues happily with your work in production. Meanwhile, your invoices are unpaid and your messages are increasingly ignored. When you push, you get vague references to “cash-flow issues,” “scope problems with the client,” or “we are still waiting on Upwork.” Eventually the tone turns defensive or aggressive: “this is between us, not the client,” “you knew this was risky,” or “I never guaranteed payment.”
At that point you are no longer dealing with a normal delay. You are fronting labour and IP to someone who is keeping the revenue.
How Upwork agencies and subcontractors actually work
To understand where your leverage is, you need to know how Upwork structures agency and subcontractor relationships.
Upwork defines an agency as a team of freelancers led by an agency owner. The agency owner or managers handle client communication, assign work to team members, and manage contracts and payments. All contract earnings from agency jobs are paid into the agency’s Upwork financial account, not to individual members, and the agency is then responsible for distributing earnings to its members according to whatever internal arrangements they have. Upwork explicitly states that it does not facilitate payments from agencies to their members.(Upwork Support)
The same theme appears in Upwork’s User Agreement. Service contracts are between users; Upwork is not a party. If you are an agency or an agency member, the agreement makes clear that the agency is solely responsible for paying its members for work performed on behalf of the agency.(Upwork Legal Center) In other words, as far as Upwork is concerned, the paying obligations to you are an internal matter between you and the agency.
Upwork’s terms also contemplate subcontractors more broadly. They allow a user who agreed to perform services under a service contract to use employees or subcontractors, but they emphasise that the original user remains responsible for the quality of services and for complying with applicable law.(Upwork Legal Center) That means your white-label partner can hire you, but they remain the one on the hook to the end client. Upwork does not suddenly treat you as a direct party to the end-client contract just because you do the work.
For you, that has two important consequences. First, when you are an agency member, you have no direct contract with the end client inside Upwork; your claim is against the agency. Second, when you are an off-platform subcontractor, you may have no Upwork contract at all; your claim is again against the partner who engaged you, not against the end client or Upwork.
Who actually owes you money: Upwork, the end client, or the agency?
As frustrating as it feels, Upwork almost never owes you money directly in this scenario. The service contract on Upwork is between the end client and the agency or lead freelancer. Upwork acts as payment intermediary and escrow provider but is not a contractual party to the service contract itself.(Upwork Legal Center) Once Upwork releases funds to the agency’s account in line with its escrow and payment protection rules, its role is essentially over.
The end client also typically does not owe you money directly if you do not have a contract with them. They owe money to the agency under the service contract. The agency owes money to you under whatever written or unwritten agreement you have with them. Lawyers describe this as “privity” of contract: you cannot usually enforce a contract you are not a party to.
Your real contractual counterpart is the agency or lead freelancer who asked you to do the work. Whether your agreement with them is formal or informal, they are the one who requested your services, accepted them, and is supposed to pay you.
That is why your demand letter needs to be addressed to them, not to Upwork or to the end client. You may copy the end client if that makes strategic sense, but your payment claim sits against the partner.
Why Upwork’s dispute tools often cannot help you as a subcontractor
Upwork’s dispute and payment protection systems are designed for the relationship between the party with the Upwork contract and their client. Fixed-price disputes on Upwork focus on whether a funded milestone’s deliverables were submitted and whether the work meets the milestone description. If a client does not pay a milestone, the freelancer or agency can file a dispute within a defined window, and Upwork’s mediation team will review evidence and make a non-binding recommendation.(Upwork Support) Hourly disputes work through review of the Work Diary and have their own rules and deadlines.(Upwork Support)
As an agency member, you do not usually have control over these processes. Upwork’s help centre states that all contract earnings go to the agency’s account and that you need to look to your agency for payment. Upwork does not get involved in that internal distribution.(Upwork Support) If the agency mishandles the client relationship, refunds money, or never passes funds on to you, Upwork’s view is that this is between you and the agency.
If the agency has hired you via a separate Upwork contract where they are the “client” and you are the freelancer, then you can use Upwork’s usual tools against them: you can rely on Hourly Payment Protection if you meet the criteria on an hourly contract, or you can file fixed-price disputes if they refuse to pay funded milestones.(Upwork Support) In that setup, your leverage is much better and you may never need a demand letter.
The worst case, which is common in white-label arrangements, is where the partner hires you off-platform entirely or through some external payment channel, sometimes mentioning an Upwork client but not formally adding you to any Upwork contract. In that case, you cannot use Upwork’s dispute processes at all because, technically, Upwork does not see you as part of the transaction.
That is precisely the space where a traditional demand letter becomes relevant.
The legal backbone of your claim against the white-label partner
You do not need to turn your demand letter into a mini-lawsuit, but it helps to understand what legal ideas sit quietly behind it.
The first is straightforward breach of contract. If you and the agency agreed that you would perform specific services in exchange for specific payment, and you did the work while they failed to pay, that is a classic breach. The “contract” can be a signed document, a string of emails, a series of Upwork messages, or even a clear oral agreement, as long as the essential terms can be identified.
The second is quantum meruit, a doctrine that lets a service provider recover the reasonable value of their work when there is no enforceable contract or when the contract does not cover all of the work performed. Courts and commentators describe quantum meruit as a way to prevent unjust enrichment: when one party requests and accepts services, the law can imply a promise to pay their reasonable value even if the price was never properly agreed in writing.(Cornell Law School) In practical freelancer terms, it means that if your partner asked you to do the work, you did it, and they are using the result, they should not get that benefit for free.
The third is unjust enrichment itself, a broader equitable principle that says a party should not be allowed to retain a benefit unfairly at someone else’s expense.(Sanderson Attorneys) If your partner has been paid by the end client and is keeping the money while you absorb the cost of production, that is the story you are telling.
You do not have to use these terms in your letter, but structuring your narrative around them helps. You are explaining that they requested your services, you delivered them, they were paid by the end client, and it would be wrong for them to keep that money while leaving you unpaid.
Before you send a demand letter: triage and evidence
Before you escalate, take a careful moment to collect the facts. The goal is to be able to tell a simple, credible story on paper.
You want to know who the players are: the end client’s legal or business name, your white-label partner’s legal or business name, and your own. You want the key dates: when the work was agreed, when it started, when you delivered, when the partner got paid, and when they stopped paying you. You want the numbers: what you were promised, what you have been paid so far, and what remains outstanding.
You should gather the written record: Upwork messages between you and the partner, emails, direct messages, any shared documents that describe scope, rates, and timelines. If you have agreed statements like “the client has paid” or “I will pay you after this milestone clears,” those are particularly important. If you know the end client’s identity and that the work is live on their site or in their systems, screenshots of that can help underline the benefit your work created.
You should also be clear about your own performance. Were there delays or quality issues on your side? Did you complete everything you promised, or did the scope change mid-project? If there were problems, you can still have a claim, especially for completed portions, but you will want to acknowledge reality rather than overselling.
Once you have that picture, you can ask yourself a simple question: is this a misunderstanding that can still be resolved informally, or is the partner clearly avoiding their obligations? A demand letter is not a first email. It is the message you send after reasonable attempts at informal resolution have failed.
How to structure a non-lawyer demand letter to a white-label partner
A good demand letter in this context has five jobs.
First, it identifies the parties and the project. The reader should know exactly who is writing, who is being addressed, what project or client is at issue, and how the relationship was structured.
Second, it summarises the agreement and the work. You describe in plain language what services you agreed to provide, what the partner agreed to pay, how you performed, and what the partner received. If the end client has already paid them, you mention that.
Third, it explains the problem. You state clearly that you have not been paid as agreed, that attempts to resolve this informally have not worked, and that the partner is currently retaining the benefit of your work without paying for it.
Fourth, it sets out what you want and by when. That usually means a specific sum, a method of payment, and a deadline. If you are willing to compromise, you can say so, but you should still anchor the letter in a concrete figure.
Fifth, it explains that if the problem is not resolved you will consider all available options, including legal action and, where appropriate, informing the end client. You do not need to threaten anyone. You are simply making it clear that you are prepared to defend your right to be paid.
What you are really doing is forcing the partner to confront the situation in writing rather than hiding behind delays and vague messages. You are also creating a record that may matter later.
Free demand letter template for unpaid subcontractors and white-label partners
Here is a template you can adapt. It is written for a subcontractor or behind-the-scenes partner who did the work while another freelancer or agency held the Upwork contract with the end client.
Replace the bracketed sections with your own information and adjust the tone to fit your situation.
[Your Full Name]
[Your Business Name, if any]
[City, Country]
[Email Address]
[Date]
[Partner’s Name]
[Agency or Business Name, if any]
[Partner’s Email Address]
Subject: Outstanding Payment for [Project / Client Name]
Hello [Partner’s Name],
I am writing to follow up, formally, about the unpaid work I completed for you on the [project name] for [end client name] that you managed through [Upwork or other platform].
As you know, we agreed around [date] that I would provide [short description of services, for example “front-end development for the new marketing site,” “Google Ads setup and ongoing optimisation,” or “UX and UI design for the mobile app”] for your client [end client name]. The arrangement was that you would invoice or bill the client directly under your own contract and that you would pay me [rate or total agreed amount, for example “USD 40 per hour up to 80 hours,” “USD 1,500 for the initial scope,” or “USD 500 per landing page”] for my work.
Between [start date] and [end date], I completed the work we discussed. In particular, I [briefly describe key deliverables and milestones you completed]. You confirmed in our messages on [dates] that the work was received and that you were using it for [end client name]. My understanding is that [end client name] has now paid you for this work via [Upwork or other payment channel].
To date, I have been paid a total of [amount actually received, if any]. That leaves an outstanding balance of [total outstanding amount] for work that I have already completed and that your client has already received. I have raised this with you several times by message, including on [dates], but the issue remains unresolved.
To summarise, you requested this work, you received it, and your client is using it. I have fulfilled my side of our agreement, but I have not been paid in full. I cannot continue to wait indefinitely or treat this as a loss.
I am therefore asking that you take the following steps. First, please confirm in writing that you agree the outstanding amount owed is [amount]. Second, please send payment of that amount no later than [specific date, for example ten calendar days from the date of this letter] via [agreed method, such as bank transfer, Wise, PayPal, or, if applicable, an Upwork bonus or funded milestone]. If you believe the figure is incorrect, please explain in detail what amount you believe is owed and why, based on the work actually delivered and used.
Once this payment issue is resolved, I am happy to consider the matter closed and, if you wish, to discuss how we might work together in the future under clearer terms. If, however, payment is not received or we cannot reach a fair agreement by [date], I will need to consider all options for recovering what I am owed. That may include contacting [end client name] directly to explain that I have not been paid for the work they are using, as well as exploring formal legal remedies available in my jurisdiction for unpaid services.
My preference is to resolve this professionally and without further escalation. Please treat this letter as a serious request to do that and let me know, by [date], how you intend to proceed.
Best regards,
[Your Name]
[Your website or portfolio link, if any]
You can harden or soften this language depending on your goals. In some cases, you may want to mention specific attempts to accommodate them, such as agreeing to extended timelines, providing extra work, or offering payment plans. In other cases, it may be more effective to stay concise and simply state the facts and the number.
If you have been working as a formal agency member on Upwork, you may also decide to attach or quote the parts of Upwork’s terms that say the agency is solely responsible for paying its members, to underline that they cannot hide behind Upwork.(Upwork Legal Center)
Frequently asked questions about agencies, subcontractors, and demand letters on Upwork
What is the difference between an Upwork agency member and an off-platform subcontractor?
An agency member is connected to an agency profile inside Upwork. When you work on agency contracts, the contract is between the client and the agency, and all earnings are paid into the agency’s Upwork account. The agency then pays you according to whatever arrangement you have with them, and Upwork does not manage that internal payment.(Upwork Support) An off-platform subcontractor, by contrast, is someone the agency or freelancer engages outside the Upwork agency system, often through direct invoices or external payment channels. In both situations, your claim for payment is against the agency or freelancer who engaged you, not against the end client or Upwork.
Can I open an Upwork dispute if the agency has not paid me?
If your contract is directly with the agency on Upwork, where they are the “client” and you are an independent freelancer, then yes, you can use Upwork’s normal dispute processes. For fixed-price contracts that means filing a dispute if they do not pay a funded milestone; for hourly contracts it means relying on Hourly Payment Protection if your Work Diary meets the requirements.() If, however, you are an agency member working under the agency’s contracts, Upwork explicitly tells you that payments go to the agency and that any distribution disputes are between you and them.(Upwork Support) In that case, Upwork’s dispute tools are not available to you against the agency; your recourse is outside the platform.
Can I demand payment from the end client directly?
As a rule, your contract is with the agency or lead freelancer, not with the end client, so your legal claim is against the partner who engaged you. There are exceptions, such as if the end client signed a separate agreement with you, but in the classic white-label arrangement all of your instructions and approvals came from the partner. That does not mean you can never contact the end client. As a pressure point, some subcontractors choose to inform the end client that they have not been paid for work the client is using, without demanding money from the client. Whether that is wise depends on the business context and any non-disparagement or confidentiality clauses you may have signed.
What if the agency says the client never paid them?
Sometimes it is true; sometimes it is an excuse. You can ask for evidence, such as screenshots from Upwork’s transaction history showing that the client has not paid or that a refund was issued. Upwork’s own terms remind agencies that they are responsible for their subcontractors and agency members.(Upwork Legal Center) If you agreed clearly that your payment depended on the client paying, that risk-sharing may be part of your bargain. If you did not, the partner’s failure to manage their client should not automatically transfer the loss to you. In practice, many subcontractors treat “client has not paid” as a starting point for negotiation rather than accepting a total non-payment.
What if we never signed a written contract?
In the freelance world, many relationships are based on emails, chats, and recurring patterns rather than formal contracts. That does not mean you have no rights. Messages on Upwork, email threads, and even voice notes can form evidence of an agreement: you agreed to provide specific services, they agreed to pay you. Quantum meruit can fill gaps when there is no written contract or when the contract does not cover all of the work performed, by allowing you to recover the reasonable value of services provided at the request of the other party.(Cornell Law School) Your demand letter can describe the agreement in plain language even if it was never captured in a formal document.
Is it safe to mention legal concepts like “breach of contract” or “unjust enrichment” in my letter?
You can, but you do not have to. Using labels like “breach of contract,” “quantum meruit,” or “unjust enrichment” can make the letter sound more formal, but misusing them can also undermine your credibility. If you are confident you understand them, you can say, for example, that their failure to pay is a breach of your agreement and that keeping the benefit of your work without paying is a form of unjust enrichment.(Sanderson Attorneys) If you are not comfortable, focus on facts: they asked for the work, you delivered it, they were paid, and you were not.
Should I copy Upwork support or legal on my demand letter?
Upwork is not a party to your subcontract with the agency and will generally not get involved in internal payment disputes.(Upwork Legal Center) Sending a copy of your letter to Upwork is unlikely to change that. It may be appropriate to report the agency if they are clearly abusing the platform, such as by repeatedly using unpaid subcontractors or engaging in fraud against clients, but that is a separate trust-and-safety issue. Your demand letter should be aimed primarily at the entity that owes you money.
Can I threaten to leave a bad Upwork review for the agency?
If your relationship with the partner is through a direct Upwork contract where they are your client, you may well have the ability to leave feedback when the contract closes. You should not, however, use that feedback right as a weapon to extort payment; that is the same feedback-manipulation behaviour Upwork condemns when clients do it to freelancers.(Upwork Support) Instead, treat feedback as a place to give an honest, factual account of your experience once the matter is resolved or abandoned. A demand letter should focus on payment and performance, not on threats to damage reputation.
What if I subcontracted without telling the end client?
Upwork allows users to subcontract or to act via agencies, provided they remain responsible for quality and comply with applicable law.(Upwork Legal Center) Many end clients care more about results than about which specific human on your team wrote the code or designed the layout, as long as confidentiality and security are respected. If you subcontracted without disclosure, that may create a separate issue between you and the end client, but it does not erase the fact that your white-label partner requested and used your work. Your payment claim is still against them. You should, however, be careful about involving the end client directly if your subcontracting was not authorised.
Can the agency argue that I was really their employee and not an independent contractor?
Agencies sometimes blur the line between contractor and employee, especially when they control your schedule and give you ongoing work. Misclassification and employment law are complex and vary by jurisdiction. For the limited purpose of a demand letter about a relatively discrete project, it is usually more straightforward to frame your claim as one for unpaid contractor services rather than as an employment dispute. If the relationship was long-term, full-time, and tightly controlled, you may want to consult a local employment lawyer before escalating.
Does it matter if I am in a different country than the agency?
It matters for enforcement and practicality, but it does not erase your claim. Cross-border disputes are harder to litigate, but a clear, well-documented demand letter can still carry weight. Many agencies care about their reputation, their payment processor relationships, and their ability to work with future subcontractors. They may decide that paying you is cheaper than dealing with an angry subcontractor who is prepared to contact their client, leave factual reviews where permitted, or pursue legal action locally. When amounts are large or the agency has a clear footprint in your jurisdiction, it may be worth going further than a letter; when they are small or the agency is essentially untraceable, the letter may be more about principle and deterrence.
How much money should be at stake before I bother with a demand letter?
There is no strict threshold, but most people reserve formal letters for disputes where the unpaid amount is meaningful in relation to their income and the time investment. For a very small sum, sending a brief final email and moving on may be more rational. For larger projects where you have invested dozens or hundreds of hours, a demand letter can be an efficient way to test whether the partner is willing to deal with you seriously without immediately jumping into court.
What if I am partly at fault because my work had issues?
Even if there were problems with your work, that does not automatically mean the agency can keep everything without paying you anything. Many disputes are mixed: perhaps there were bugs or delays, but you still delivered substantial value. Your letter can acknowledge the issues while still insisting on fair payment for the work the partner kept and used. In some cases it may make sense to propose a reduced figure that reflects both the imperfections and the value. That kind of reasonable compromise often reads better than an all-or-nothing position.
Can I use this template for non-Upwork white-label work?
Yes. The core structure of a white-label dispute is the same whether the end client is on Upwork, another platform, or entirely off-platform. There is a prime contractor who owns the client relationship and a subcontractor who does much of the work. When the prime gets paid and the subcontractor does not, the subcontractor’s claim is against the prime. You would simply adjust the template to reflect the name of the platform or the fact that there was no platform at all, and refer to your emails or signed contract instead of Upwork messages.
How do I avoid this situation in the future?
Future-proofing usually comes down to three habits. First, insist on clear written terms with your white-label partners about scope, rates, timing of payment, and what happens if the end client delays or refuses payment. You can do this inside Upwork messages, through a simple subcontractor agreement, or via a direct-contract tool.(Upwork) Second, whenever possible, structure your work so that you have your own direct contract with the paying entity, even if the project is presented as white-label; for example, the agency can be your Upwork client instead of simply adding you as an agency member with no written arrangement. Third, pay attention to early warning signs: partners who are vague about money, who want you to start before agreeing on rates, or who refuse to create any written record of your arrangement are far more likely to create problems later.
White-label and subcontracting relationships can be some of the most rewarding work on Upwork when they are handled properly. They let you plug into bigger projects without having to win the end client yourself. But they also add a layer of risk between you and the money. Understanding who really owes you, what Upwork can and cannot do for you, and how to assert yourself calmly with a written demand is a crucial part of playing in that space as a professional rather than as a powerless extra.