Hi
My employer is about to enter insolvency. I advised this action based on modelling the unsustainability of the business and had pushed for it to happen earlier when we still had some money. It is now happening when there is no money left to pay March's payroll bill (this includes my salary).
The National Insurance fund will only pay me £479 per week which is less than half my weekly salary. My employer needs my help in filling in the various documents etc but I feel like it doesn't make sense that I would continue working when I would be getting paid so little. I know that there won't be any money left to pay me even if I was a preferential creditor but there is room on my employer's overdraft that they are personally liable for. They have already mentioned paying some people out of their own monies which is why I am starting to get annoyed about only getting paid half my salary. Basically I am not sure where I stand legally on this. Surely I am not obliged to work for half pay? Surely there is something in place to ensure full payment for key staff required?
I understand that this is a horrible situation for all concerned but I am annoyed that I am personally losing out by helping them when they were so bad at running their own business (I have only worked with them a short time). In addition, I don't know if I can trust them. They won't let me talk to the liquidator directly which seems odd but then they are promising me future work if they set up a new company and it could be that I need that work. Does anyone else have experience of this situation? It seems a unique position that only accountants have of a) knowing definitively that you won't be paid as there is not enough money and b) being needed to continue working when you know you won't be paid.
Any advice would be gratefully received...
Replies (10)
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Try and be cynical about the situation
They need you to carry on working so they promise to give you future work. Do you believe/trust/need them?
As a creditor you can talk to the liquidator indeed it's in your interest so to do. It might be that he will pay you to do the necessary documentary work. If he doesn't tell the directors that you will work provided that you are paid up front
You don't say whether you are a qualified accountant or not. This is part of a a very good learning experience
Bernard is right - if you stay on as an employee you are a preferential creditor and therefore entitled to speak direct to the liquidator. If you do any work he will be the one who will pay you. If you have any qualifications or are a student speak to your institute.
I would start looking for a job now. Get paid upfront this month and tell the employer you will work until that money is used up and on the basis that a reference will be supplied. Surely you are in a strong position if they need you as much as you say they do?
I'd look for a new job but £479 a week is probably your best option in the short term. It's more than plenty of folk are getting.
Leave if it bugs you too much - but be practical.
What is your notice period? If you know you won't be paid just move on. If you are not paid for the last month I assume you will still be a creditor when the liquidation starts whether you have already left of not.
Obviously take proper advice which you are doing, this is not proper advice, it is just what I would do. It is not your company or your responsibility. As long as you can explain to future employers why you left and it is a good reason since the company went down the pan, then you will be fine, companies fail and people move jobs all the time these days.
At the point when your payday passes, and you don't get paid, your 'employer' has terminated your contract by breach - you are no longer under any obligation to work for them.
Presumably, at this point, they owe you 3/4 of the month.
If you walk out now, you won't get paid anyway, but you may well have damaged any future claim to get paid for the work already done.
So, I would probably work this week anyway, assuming you have nothing else to go to right now.
Once Friday arrives with no payment, I would then insist on any back pay being made before any further work is done.
With regard to references - you simply need point out in future that the employer went bust.
These days most references are generic anyway, with nothing positive on them.
If you need to prove employment dates, you could always provide copies of P60s and payslips - with the figures blanked out, I suppose.
You could always agree to work for future weeks for less pay, but insist on being paid weekly, once previous contracted pay has been paid.