How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Ben Jones Your Own Question
Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 47902
Experience:  Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
29905560
Type Your Employment Law Question Here...
Ben Jones is online now

Hello, I joined a start-up company on 6th August 2014 as

Customer Question

Hello,
I joined a start-up company on 6th August 2014 as a permanent employee. As per my contract, I am to be paid a monthly salary via PAYE. I was paid my first salary on 8th September but since then my employer has not paid my salary. I am approaching 2 months in arrears for my salary. I did not even receive a PAYE pay slip with breakdown of Income Tax and NI contributions.
I was also offered equity stake under the EMI scheme in the business. To date my employer has not provided me the paperwork for the EMI scheme setup for the company and confirmed the number of shares that I hold and the initial price per share.
I invested £15,000 as a shareholder after 8th September due to what I was to the promising commercial prospects for the company on the horizon. I have both hard copies and soft copies of the agreement I signed along with proof of the bank transfer. However, my employer still has not provided me a share certificate or additional documentation as requested.
Since I have to pay my mortgage and provide for my wife and child, I am considering other permanent jobs or contracts to cut my losses. However, I wanted to check the following:
1) What is my recourse to the unpaid salary?
2) What is my recourse to the £15,000 paid in share capital?
3) I have 3 months notice period on my contract. Since my employer is in breach of contract, does this still mean that my 3 months notice period still applies? This would mean that I would have at least 3 months wort of salary arrears, which seems completely unfair to me an employee. Or does this mean that since my employer is in breach of contract by not paying me my monthly salary, that the contract no longer holds water and than I can choose to leave whenever?
4) If my employer were to make a salary payment weeks late, is late payment still considered breach of contract?
I would be grateful if you could answer my questions above.
Regards,
Karthik
Submitted: 2 years ago.
Category: Employment Law
Expert:  Ben Jones replied 2 years ago.
Ben Jones :

Hello, my name is ***** ***** it is my pleasure to assist you with your question today. can you tell me are you getting any response to your questions at all and have you threatened any action.

JACUSTOMER-ou447ev3- :

no i am not getting any responses to my questions but i have not threatened any legal action yet.

JACUSTOMER-ou447ev3- :

but in this situation i can't live with this uncertainty waiting around for when my salary arrears would be cleared and whether my next salary would be cleared. i have to pay my mortgage and provide for my wife and child

Ben Jones :

ok thank you for that information.leave it with me I need to look up a few things and then get my advice ready.I will post back on here when done there is no need to wait and you will receive an email when I have responded.

JACUSTOMER-ou447ev3- :

if i were to find a new job, then can i leave my company without serving 3 months notice period or would i be in breach? it doesn't seem fair that i would be expected to serve my 3 months notice period while my employer doesn't honour my contractual monthly salary to be paid

JACUSTOMER-ou447ev3- :

thanks ben

JACUSTOMER-ou447ev3- :

just to let you know. the company i work for is a limited company

JACUSTOMER-ou447ev3- :

my employer is the sole director in this limited startup company

Ben Jones :

Many thanks for your patience. To answer your queries:

1) What is my recourse to the unpaid salary?

This potentially amounts to an unlawful deduction from wages, which is made illegal under the Employment Rights Act 1996.

Under law, an employer can only make deductions from, or withhold an employee’s wages in the following circumstances:



  • If it is legally allowed (e.g. to deduct tax);

  • If it is to recover an earlier overpayment of wages made by the employer; or

  • If the employee has given their explicit written agreement for the deductions to be made.


If none of the above exemptions apply, the deductions will most likely be unlawful. In order to try and resolve this, the employer should be contacted in writing, advised that this is being treated as unlawful deduction of wages and ask them to pay back the money within 7 days. Advise them that if they fail to pay the money that is owed, legal proceedings could follow.

If the employer does not return the money as requested, the following options are available:

a) Employment Tribunal - the time limit to claim is only 3 months from the date the deductions were made. To make the claim, form ET1 needs to be completed and submitted - you can find it here: https://www.employmenttribunals.service.gov.uk/employment-tribunals

b) County Court – this is an alternative way to claim and the advantage is that the time limit is a much longer 6 years and is usually used if you are out of time to claim in the Tribunal. The claim can be made online by going to: www.moneyclaim.gov.uk.

Hopefully by warning the employer you are aware of your rights and are not going to hesitate taking further action they will be prompted to reconsider their position and work towards resolving this.

2) What is my recourse to the £15,000 paid in share capital?

This is a corporate law query rather than an employment one so sadly I cannot assist with it but you can ask it as a separate question to our corporate lawyers on our site.

3) I have 3 months notice period on my contract. Since my employer is in breach of contract, does this still mean that my 3 months notice period still applies? This would mean that I would have at least 3 months wort of salary arrears, which seems completely unfair to me an employee. Or does this mean that since my employer is in breach of contract by not paying me my monthly salary, that the contract no longer holds water and than I can choose to leave whenever?

You would be able to leave with immediate effect if necessary. As the employer has acted in breach of contract then the whole contract can be considered void, together with its terms, including the requirement for you to serve a notice period on leaving. You may therefore claim that you have been constructively dismissed and leave with immediate effect.

4) If my employer were to make a salary payment weeks late, is late payment still considered breach of contract?

If there was a specific payment date stipulated in the contract then the delayed payment would still be a breach of contract, even if you ended up receiving the money due. The requirement is to pay a specific amount by a specific date and only meeting half of that does not mean they are no longer in breach.

Hope this clarifies your position? If you could please let me know that would be great, thank you

JACUSTOMER-ou447ev3- :

Thanks Ben for your reply.

JACUSTOMER-ou447ev3- :

I contacted ACAS and asked them the same question. They mentioned that even though my employer has breached the contract by not paying me, this doesn't necessarily mean that i won't have to serve my 3 months notice period. They were saying that 2 wrongs don't make a right and hence I would still be required to serve 3 months notice period. If during this period I am not paid any wages, I would then need to go to my local authority for financial support. The risk I was told was that if I left straightaway, then my employer can take me to the Small Claims Court for not serving my contractual 3 months notice period.

JACUSTOMER-ou447ev3- :

This doesn't make any sense to me as this is completely loads the chips in favour of the employer and not fair to the employee. After you response, I won't ask any more questions but will go ask the relevant question to the corporate lawyer on your website. Thanks so much for you help.

Ben Jones :

I do not really agree with the advice from ACAS (also remember that they are not qualified lawyers) - the initial breach where you have not been paid can amount to a serious breach of contract because receiving payment on time is one of the fundamental rights in an employment relationship. Also if you fail to serve your full notice period there is little the employer can do apart from suing you for breach of contract and they can only do that if they have actually suffered losses as a result, but as this is a very rare claim made by employers and considering the circumstances here I think it is rather unlikely it will happen. They cannot just sue you for not working your notice period, they must show that actual and reasonable losses have been incurred as a result

JACUSTOMER-ou447ev3- :

Thank you so much. I will close this chat and give my rating now.

Ben Jones :

you are welcome, all the best

Ben Jones and other Employment Law Specialists are ready to help you
Customer: replied 2 years ago.

Hi Ben,

Thanks for your email.

You mentioned that any questions regarding paid in share capital is a Corporate Law issue. Which option do I select from the justanswer.co.uk site to pose a corporate law question?

My employer significantly delayed payments but has brought all my payments up-to-date. However, 9 contractors in my workplace are lagging in pay by 6 to 8 weeks. So there is no certainty that any of us will be paid next month. Given the scenario, I am looking at other permanent roles and contracting roles. The latter requires me to be available to start within 2 to 4 weeks but given the time of year would most likely be after the new year. If I were to obtain a contracting opportunity, then I would not be able to serve the full 3 months notice. What exit strategy would you advise that would be legal and upheld in a court of law?

There are 11 employees: 1 permanent employee (me) and 10 contractors all of who have set up limited companies and invoicing to my company. We are all considering legal action against the CEO who is the only legal director of the company. All of us have joined at different points in time and new people have been taken aboard when existing staff hadn't been paid. What are our recommended legal options? How much is this likely to cost and how long would this take?

I look forward to hearing from you.

Regards,

Karthik

Expert:  Ben Jones replied 2 years ago.
Hi Karthik, we do not have a dedicated corporate law section here but just post it in the general UK law category and oerhaps make it for the attention of AJ who is a corporate lawyer on here.
In terms of the notice period if you have mot actually been paid what you were due you can always rely on the breach of contract by the employer to argue that the contract was void, including the notice period you were due to serve.
You can all make a claimmtogether, making it as joint claimants against the company. The fees can vary considerable depending on whether you use legal assistance, the complexity, how longnit takes, etc. the initial fees will depend on the overall value of the claim. To get an idea of fees if you are going to use a lawyer then you will be best advised to approach a few to see what they quote you as it can vary