Resign or wait for insolvency/administration

nicksdunn

My employer are quite likely to go in to insolvency/administration at the end of the month.

Having been with them for less than two years I'm not eligible for redundancy.

Notice period is two months, and since we have 7k in the bank which is not sufficient to pay all outstanding bills etc. I am unlikely to be paid for this month's work (other than a token amount).

There may be pipeline cash in the next day or two (around 20k - 30K) but that will pay last month's PAYE bill and the be swallowed by other costs so won't fundamentally change the situation.

In terms of trying to get as much as I'm entitled to, am I better resigning now with some form or comprimise agreement or waiting for administration?

For the record, I want to leave anyway.

Thanks.

SarEl

But you won't get a "form or compromise agreement" by resigning - so how do you think this will make you better off? You resign - then you resign. You don't get extra (or any) pay by resigning - but you will get sanctioned for benefits as you resigned. I don't understand what makes you think resigning is a good idea.

nicksdunn

Thanks for your response.

Leverage really, on the basis that if insolvency can be avoided and they can bumble along hoping for a miracle then that is the employers preferred solution - if I resign and am refused pay due for this month, in addition to my notice period, then I can force insovlency.

At that point they are better off agreeing a compromise of, for example, one month's salary which under compromise rules I would recieve free of tax and at no extra cost to my employer, in return for agreeing not to pursue the two months notice.

Given the c GBP400 cap on weekly pay to e'ees in administration situations etc. and maximum of a week at 400 for notice (having been there less than two full years but longer than a month) I would be better off (2000k under insolvency, 3000K under compromise).

Does that make sense?...

PasturesNew

I'd been in a job for a year when a company was taken over. The dept would be closed down, so the boss advised that if you were fairly new and had no big redundancy deal potential, then the best thing to do was to get out now and start looking for another job (get a new job first, then resign) ... he said we'd stand a better chance of getting a job with only a few of us looking for a new job, rather than wait until 100 people were looking.

SarEl

I'd expect them, at the very least, to tell you to take a hike. If they can't afford to pay you the salary, they certainly can't afford to pay you a compromise agreement. Plus solicitors fees for said agreement.

nicksdunn

@pasturesnew - definitely good advice. I have an agreed offer from another firm, so am trying at least to get this months money.

@SarEl - why take a hike?

Aside from contractual agreements do you not think than an employee's right to recieve his basic salary should be given priority over the inland revenue? T

here are currently no payment plans etc. in play so they could easily arrange to stagger payments to ensure staff are paid.

If they did decide to honour the contract and pay my basic, then whether they pay the tax to me or to the government is irrelevant for them, but for me is important since I am allowing them to disregard part of my terms of employment.

Not to mention the fact that I am responsible for the iminent injection of capital. Point being, it's not like I'm ripping them off, much the opposite.

Regarding legal costs, this could be arrange for free via friends.

hcb42

your employer isnt in a position to incur legal fees for a compromise agreement, when they cannot afford to pay you. If they go bust, then they won't pay you anyway, so in effect there is nothing in it for them anyway. If they think they can survive by not paying you for a couple of months, then maybe a sabbatical is a solution, but I am not sure saving one salary will pull them from the brink.

What you do next will depend on how easily you think you can get a new job. If you resign, then benefits might be sanctioned - although I was in a similar position five years ago and mine were not, as company went into administration the day after I left (having worked my notice)

I personally wouldnt want to be in a position of working for a month for no pay - been through it before, and it's awful. So I probably would get out, but that's just my view, many will disagree of course.

you would of course incur legal fees under the compromise agreement. Often employers pay these, but not always

SarEl

nicksdunn wrote: »

@pasturesnew - definitely good advice. I have an agreed offer from another firm, so am trying at least to get this months money.

@SarEl - why take a hike? I didn't say this - I said that the employer probably would. You are asking them to pay out more money - for you and for the solicitors fees - at the same time that you are suggesting they have no money to pay you at all!

Aside from contractual agreements do you not think than an employee's right to recieve his basic salary should be given priority over the inland revenue? T I never said that employees were not entitled to be paid, and what I think of the Inland Revenue is irrelevant. You are suggesting to them that they commit fraud (because that is what this is), and you are putting yourself before other employees - who I also think have a right to be paid, but may not be if you take your money before them. There are laws and regulations in place for a reason. If the employer cannot meet their wages bill then they should not be paying one employee at the expense of the others.

here are currently no payment plans etc. in play so they could easily arrange to stagger payments to ensure staff are paid. I assume that staff are expecting to be paid on a certain date and have bills to pay. Why should you be first in the queue?

If they did decide to honour the contract and pay my basic, then whether they pay the tax to me or to the government is irrelevant for them, but for me is important since I am allowing them to disregard part of my terms of employment. Well, because, as I said, not paying tax is illegal. You are employed. The money is wages. Tax is due on them. They cannot turn your wage into something else that it is not.

Not to mention the fact that I am responsible for the iminent injection of capital. Point being, it's not like I'm ripping them off, much the opposite. Irrelevant. I assume you were doing your job. That is what the wages are for.

Regarding legal costs, this could be arrange for free via friends.

Whilst I can understand why anyone would want to try to ensure that they get paid, you are asking the employer to do something illegal (claim that wages upon which taxes are due is payment for something else so as to avoid tax) and immoral (pay you off before paying other staff what they too are due).

nicksdunn

why take a hike? I didn't say this - I said that the employer probably would. You are asking them to pay out more money - for you and for the solicitors fees - at the same time that you are suggesting they have no money to pay you at all!

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They have the money to pay but are choosing to underpay staff before creditors. There won't be solicitors fees as various contacts will do this for free.

Aside from contractual agreements do you not think than an employee's right to recieve his basic salary should be given priority over the inland revenue? T I never said that employees were not entitled to be paid, and what I think of the Inland Revenue is irrelevant. You are suggesting to them that they commit fraud (because that is what this is), and you are putting yourself before other employees - who I also think have a right to be paid, but may not be if you take your money before them. There are laws and regulations in place for a reason. If the employer cannot meet their wages bill then they should not be paying one employee at the expense of the others.

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I just meant that if something can be arrange (ie staggered payments) with the Revenue to allow more free cash to pay salaries, then surely that it the course of action. Regarding others being paid, it's a fair point given I haven't told you full details: there are four people in the business. The most junior has been guaranteed her wage. I am not and having not been with the firm for two years won't receive redundancy money. The number two has been here 10 yrs and wants redundancy as that would be very lucrative for her, so she would prefer not to be paid so she can take her case to the government. The fourth person is the owner. So whatever happens I'm going to be worst off.

here are currently no payment plans etc. in play so they could easily arrange to stagger payments to ensure staff are paid. I assume that staff are expecting to be paid on a certain date and have bills to pay. Why should you be first in the queue?

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My point was that when there are options to arrange payment with solutions with In Rev why not take them if it allows staff to be paid. Beyond that pls refer to former comment regarding other staff.

If they did decide to honour the contract and pay my basic, then whether they pay the tax to me or to the government is irrelevant for them, but for me is important since I am allowing them to disregard part of my terms of employment. Well, because, as I said, not paying tax is illegal. You are employed. The money is wages. Tax is due on them. They cannot turn your wage into something else that it is not.

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as mentioned, it's not illegal. At worst it's avoidance but it's totally above board. It's a severance package since my position is untenable and they need me to forgo any claim I have to my two months notice period.

Not to mention the fact that I am responsible for the iminent injection of capital. Point being, it's not like I'm ripping them off, much the opposite. Irrelevant. I assume you were doing your job. That is what the wages are for.

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Fair point, duly noted.