Closing Family Business

Chorlie

Hi,

Not sure if this is the right place to ask but here goes anyway....

A friends family business is having to close after 40+yrs in business, this is for several reasons (owners age he's passed retirement age, owners health he's has heart problems, economic climate little business etc), they employ 2 people full time and they have worked for them for over 20yrs each (one is 60yrs old & the other mid 40’s).

This has all come quicker than planned, so looking for general things to consider & do to close the business down.

From reading the Direct Gov Web Site, there will be Redundacy to pay (max of £12,900) and also a notice period (12 weeks). The Redundancy will be Tax Free (under £30k), but the notice period pay is treated as there normal pay so is Taxed, NI.

They want to do right for there employees, they have been good, trusted workers who are friends, however its a small business so little money to play with so can't afford to pay more than is needed.

What happens if they find another job before the 12 weeks notice period is up, will Redundacy still have to be paid, will the full 12 weeks notice period still have to be paid in full?

Also what other things will they need to consider?

Thanks for you comments

SarEl

Depends what you mean by "doing right". If the employer wants to, they can pay them pay in lieu of notice (PILON), and since this is almost certainly not a contractual right nor custom and practice, this payment can be tax and NI free. The £30k is a TOTAL, so as long as the total payment is less than £30k then it will be tax free - subject, as I said, to this not being a contractual right or normal practice.

If they find another job in the 12 weeks notice (assuming PILON isn't paid) then they are still entitled to full redundancy pay and to whatever notice they work - they can ask to leave earlier and then the balance of the unworked notice isn't due, but if they work their full notice and start the new job after that, they get both full notice pay and redundancy pay.

Chorlie

Yep, this is as we thought from reading the net last night.

There is a lot to do before the business is closed, so there will be work for them for the next 6 weeks and than for several weeks after that they will be a lot of sorting / tiding the site up, so there will be 12 weeks work of one sort or another.

makeyourdaddyproud

Jessica Rabbit says pay a huge share dividend payment from co-account and go into administration (legally). No redundancy need be paid. Give them a good will cash payment that the taxman doesn't see. Set aside £500 for a hutch as advice in kind.

Just joking really.

SarEl

makeyourdaddyproud wrote: »

Jessica Rabbit says pay a huge share dividend payment from co-account and go into administration (legally). No redundancy need be paid. Give them a good will cash payment that the taxman doesn't see. Set aside £500 for a hutch as advice in kind.

Just joking really.

I find that "joke" in very poor taste. Do you normally find it "funny" to advise people trying to do the honest and right thing by loyal and long-serving members of staff to run off with the money leaving their employees with nothing and the taxpayer with the bill? I suggest you get your sense of humour checked out. There is something wrong with it. By the way, even if your assumption about the legal status of the employer is correct - most of this actually is illegal and a few other bits unlawful.

makeyourdaddyproud

C'mon... Where's the festive humour?

makeyourdaddyproud

OP should remember the roadmap of a minimal of 3 meetings and consultation periods.

Without that, the process IS already unlawful. In this case, expect the business owner to sell their house...

getmore4less

If they can pay the PILON tax free that can save money over having them work the notice(allthough you lose the worker which looks like a problem).

PILON can be paid NET.

Also saves 3 month acrued holidays.

Any way they could take over the business

davec1960

makeyourdaddyproud wrote: »

OP should remember the roadmap of a minimal of 3 meetings and consultation periods.

Without that, the process IS already unlawful. In this case, expect the business owner to sell their house...

Can you quote the relevent law as I have worked for a few companies that have made people redundant and have never known more than the initial "at risk" meeting and the second "sorry we couldn't find any alternatives, you're redundant" meeting. The second meeting was always one week after the "at risk" meeting

Chorlie

Well its a case of close, after on going work is completed & machines, stock etc sold. Pay thousands to update machine ect for it to close in the next 12 to 36 months because the owner will be 80yrs old, that if the economic climate hasn't forced it under within that time.

So, its close down and pay them what they are due....there has been two meetings already and both employees understand the situation, they will receive letters by the end of the week so its in writing and a breakdown of Redundancy amounts & PILON.

As for selling there has been little interest and since its a building related company than times are very hard for small businesses.

SarEl

makeyourdaddyproud wrote: »

C'mon... Where's the festive humour?

It all depends - is anyone making you redundant for Christmas? If so I might find that very amusing.

Perhaps you find the idea of people being made redundant humerous. I doubt you will find many here who do. And I doubt you will find many who think that employers attempting to deliberately avoid their legal obligations at the expense of their workers funny either - and that abviously includes the OP who is trying to help an employer do the right thing by employees who have worked for them for a very long time.