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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 69033
Experience:  Qualified Employment Solicitor
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My brother and I work for a family property management

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Hello, my brother and I work for a family property management company. We're in the middle of developing 8 flats. We have completed 4 of them. However, 3 weeks before the coronavirus hit, and the self-isolation measures were ordered, the company - being bankrolled by our mother's diminishing life savings, from which we were being paid - stopped paying my brother and I. In other words, our mother, who was bankrolling the company until the remaining 4 flats could be completed, stopped paying us. Had the coronavirus not happened, the remaining four flats would have been completed by this August (5 months after her payments to us stopped). So we're not only not getting paid by our mother (who is acting on behalf of our father, the MD) - because of the lockdown, it's impossible to complete the flats by August. It's also impossible to show the flats as they're completed (the builders live on site) because we're on lockdown so can't come into contact.
Therefore is it lawful for me to apply and claim my pay under the new coronavirus laws guaranteeing PAYE payments?
We're still receiving our PAYE pay slips - and making contributions via standing order to the Pension scheme.
But my brother and I aren't being paid.
Our mother made the decision to keep paying the builders who live on site (and are continuing with the work), instead of paying us.
The company still turns over £16k per month, with £8k of that being paid out in rental obligations (ie we have a lease for these flats).
So is it lawful for my brother and I to claim under the government's coronavirus scheme to get paid, even though our mother is insisting we don't get paid?
She stopped paying us 3 weeks before lockdown.
Thank you very much.

Hello, I’m Ben, a UK lawyer and will be dealing with your case today. I may also need to ask some questions to determine the legal position.

How long have you worked there for?

Customer: replied 4 months ago.
I have worked at the company Highpad since 2014, on the payroll. My brother has worked at the company Highpad since (I think) 2015. In January of this year, Highpad ran out of cash reserves. Consequently my mother began paying us from her savings. In January of 2019, meanwhile, my brother and I had also started working at another (the only other) family property management company Farringdon.
Although Highpad had run out of money to pay us, we continued to work for Farringdon. We are employed by Farringdon right now (though Highpad is still open, sending us PAYE pay slips and registering monthly pension payments for us while it goes through the steps of closing).
We are set to continue working for Farringdon for the next 4 years (after which time, the lease on the building we're developing runs out).
By August of this year, Farringdon would have been able to pay us.
That said, our PAYE is with Highpad, not Farringdon.
Customer: replied 4 months ago.
I have worked for Farringdon since 2014 as well (though my employment contract is with Highpad). My brother has worked for Highpad since 2015. He started working for Farringdon in 2018.

Thank you. The main issue with the scheme is that it is not your choice whether you get it or not – you cannot apply for it, the employer does. So even if you are not being paid by the employer, you cannot force them to go through that scheme – it would make sense if they did but it is their decision in the end.

You still have rights though - this potentially amounts to an unlawful deduction from wages, which is dealt with 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:

{C}· If it is legally allowed (e.g. to deduct tax)

{C}· If it is to recover an earlier overpayment of wages made by the employer

{C}· If the contract specifically allows for the deductions to be made

{C}· If the employee has given their explicit written consent

If none of the above exemptions apply, the deductions will most likely be unlawful. To take the matter further, the employer should be contacted in writing, advised that their actions are treated as unlawful deduction from wages and ask them to repay the amount in question within 7 days. State that if they fail to do so, legal proceedings could follow to recover what is owed.

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

1. Employment Tribunal - the time limit to claim is only 3 months from the date the deductions were made. Before making the claim, ACAS must be engaged to negotiate with the employer and try to resolve this without the need for legal action. The relevant form to start this can be found here: https://ec.acas.org.uk/Submission/SingleClaimantPage

2. County Court – this is an alternative way to claim and the advantage is that the time limit is a much longer 6 years. Also, there is no need to negotiate before starting a claim. The claim can be made online by going to: www.moneyclaim.gov.uk.

Hopefully by warning the employer that their actions are likely unlawful and that legal action is considered, they will be prompted to try and resolve this.

Does this answer your query?

Customer: replied 4 months ago.
Thank you - that's very helpful. Given that my role in the company is Operations Director, could I therefore make the application for the covid 19 grant on the company's behalf?
My other concern is that the company doesn't have the income to pay right now - so can I claim for wages that I know the company can't pay me right now (though it could once the flats were let in August)?
Customer: replied 4 months ago.
I'm worried about breaking the law by claiming for a grant - if the company has limited cash reserves now going into the crisis (though will have maximum cash reserves in August once work should have been completed), am I breaking the law? I was being deprived of my income 3 weeks before covid 19 - though it would have been for a minimum of 5 months with my income building again as the flats were consecutively developed and let out), returning to full wages by August.
So is it legal to claim for the company under the covid-19 scheme?

You can make the claim if you are on the company’s payroll, regardless of your title. It may be pointless claiming at this stage if the company cannot actually satisfy a judgment if you win. On that basis you may wish to wait until they have money coming in again, see if they pay you voluntarily and if not – consider the claim.

You are not breaking the law by claiming, even if there will be cash in the future – remember that is the problem for most employers – they have no means to pay wages now and therefore the grants come in, most will have money again in the future so you are in the same position as everyone else.

Does this clarify things a bit more for you?

Customer: replied 4 months ago.
to clarify, I'm not breaking the law by applying for a government grant on behalf of the company to pay me?
Customer: replied 4 months ago.
Even if the company ran out of cash 3 weeks before Covid and stopped paying me on that date despite my having a contract with them?

that is correct, although the grant can only g back as far as 1 March

Customer: replied 4 months ago.
Thank you - finally, why did the grant start on May 1st?

March, not May. I have no idea, it is the Government's decision, but I suspect it is because businesses would have already started feeling the strain by then

Ben Jones and other Employment Law Specialists are ready to help you
Customer: replied 4 months ago.
OK thank you very much for your help and wisdom. Best wishes.

All the best.