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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 49852
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I am an employer and I have just lost a major client. I am

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I am an employer and I have just lost a major client. I am unable to meet this month's payroll. I still have funds to come in but these will only cover things like VAT/tax. For us to survive I need to trim the company back to the bare bones. Directors will also have to go unpaid. We can just about meet our legal obligations but I don't want to put the company into liquidation. The lost client supplied 90% of our work. Please advise on reducing existing staffing levels and the steps we must take
Hello, my name is***** am a solicitor on this site and it is my pleasure to assist you with your question today. How many employees are there and how long have they worked there for?
Customer: replied 2 years ago.
The amount I will have to release is 5 and their service is from 2 years to 7 years
Customer: replied 2 years ago.
It does seem that there are plenty of laws to safeguard the employee but not a lot for the employer
How many employees overall and do they all do the same or similar jobs?
Customer: replied 2 years ago.
The company buildup on the managment side is :
2 x Directors
2 x Office Staff covering accounts payable,VAT, Supplier Invoice,s , Wages and Invoice Payments, Switchboard
3 x Contract/Site Managers
1 x Tenant Liaison Officer
! x Renewables Manager
The rest of the staff are made up of manual labour: plumbers,heating engineers, joiners.
I need to trim the last 5 non productive staff and keep a small core of manual workers to be able to start and rebuild the company
ok and just to be clear these 5 employees you need to remove - are they the only ones doing their respective jobs or are they just a few of a number of employees who do these jobs? What I mean is, if you remove these 5, would there be no one else left doing their jobs?
Customer: replied 2 years ago.
As the company stands at the minute we do not have any contracts, sites to run or any tenants to look after. We work in the social housing sector. The knock on effect is that we no longer have work for contract/site managers. We do not have work for a TLO or a renewables manager. These people are directly employed to look after the principle contractor which has now withdrawn
Ok well you are able to consider making these employees redundant. A redundancy occurs when the employer has a reduced requirement for employees to do a particular job. So if you can identify certain positions which are no longer required and place the people doing them at risk of redundancy. Anyone with over 2 years’ service will be protected against unfair dismissal so you must ensure that you go through a fair redundancy procedure before you make them redundant. A detailed guide on what you need to do can be fund here: In summary, you will have to advise the affected employees are at risk of redundancy, conduct individual consultation with them (this is a meeting where you discuss the proposed plans and look at alternative options) and if there nothing else that you can offer them you could eventually make them redundant. The key I to consult with them and offer them suitable alternative employment if available, but obviously this may be impossible here. Once they are made redundant you will have certain financial liabilities. You must pay them:· Pay as normal until they were issued with notice of redundancy· Their contractual notice period, which cannot be less than the statutory one of 1 week for every year of service· Redundancy payment, which you can calculate here:· Any outstanding holidays You must also give them the chance to appeal the redundancy if they wish to, although in the circumstances it may be difficult to make a successful appeal as it is clear the workforce needs to be trimmed. I trust this has answered your query. I would be grateful if you could please take a second to leave a positive rating (selecting 3, 4 or 5 starts at the top of the page). If for any reason you are unhappy with my response or if you need me to clarify anything before you go - please get back to me on here and I will assist further as best as I can. Thank you
Customer: replied 2 years ago.
I am totally aware of the procedures regarding redundancies. This was not the advise I was seeking. I did explain to you at the start of this thread that we are not in a position to pay their next monthly salary nor are we in a financial position to pay any redundancy packages. The funds that we will have available over the next month will only cover the VAT and the revenue plus a skeleton staff to keep the company from going into liquidation. I does seem to me that which way we turn it does seem that the company is doomed.
The issue is that when you make someone redundant you will have these financial liabilities – you cannot get away from them. So it is an issue of how you mage these. You could ask employees to accept a delayed payment of what they are due, or to be paid in instalments. They do not have to accept that though and are entitled to ask for immediate payment. But if you make it clear that it is that or potentially nothing, they may be more agreeable to your proposal. Employees will be covered under the National Insurance Fund if their employer is unable to pay them what they are due but that only kicks in once the employer has become insolvent. So if you are not able to pay them what they are due they can petition for your insolvency and if you are unable to get a rescue package in place it may mean the company will go insolvent. So there is nothing that would guarantee you avoid insolvency – a point may eventually come when running the company is no longer viable and that is sadly the nature of business. For now it is a matter of how you meet your legal obligations and avoid insolvency and this will be a fine balancing act – the best is to try and negotiate deferred payments to the affected employees. Hope this clarifies?
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Customer: replied 2 years ago.
Thank you for the advise. This was more to the point of what I was after. This has been a family run business for 20 years. As the senior director and founder of the company I fell ill about 6 years ago and I left it in the hands of my children to run. Although I accept that I must shoulder the responsibility for the demise of the company I also have to accept the company is no longer viable
Thank you again for your time
You are welcome. I understand it is a difficult decision to make with such history but at some point it may become inevitable that the company closes. It does not mean you cannot start again int he future if things improve and carry on the legacy but only time will tell. All the best for now