What if company can't afford to pay wages?

Jet

I posted on here a while ago about what would happen if the company I work for went bust and it seems that the government would cover any pay etc. due to employees. That certainly put my mind at rest.

However, what if the company doesn't have the money to pay the salaries at the end of the month and then the boss asks us to wait for our money for a few days, weeks, month....

What would happen at that point if I decided I wasn't prepared / able to wait and resigned. What rights would i have to recover my unpaid salary?

LittleVoice

If they don't pay you, they have broken the contract with you. I don't think you would need to resign, you would simply not do further work and put in a claim for your pay.

Jarvisma

In this situation you could leave and have a case for constructive dismissal as the employer would be in breach of contract by not paying you the agreed amount on the agreed date.

Jet

Jarvisma wrote: »

In this situation you could leave and have a case for constructive dismissal as the employer would be in breach of contract by not paying you the agreed amount on the agreed date.

So what would I have to do? Go to an industrial tribunal?

Jarvisma

Yes you would, which is a very long drawn out process and by the sounds of it, if it is that the company simply cannot afford to pay you rather than just refusing to, may have further complications and may not guarantee you getting your money any time soon!

That's not very positive I know sorry. Maybe its worth having a think and deciding whether you are willing to have faith and wait to see if they stick to their word and pay up eventually or taking into account this has happened before this could be a signal that this company is obviously having major problems and so it may be best for you to get out now by looking for work elsewhere before they end up owing you even more money?

Jet

Jarvisma,

Been paid in full every month so far. But the company is not in a good financial position (I do the books - I know!) and I want to know where I stand should the worse happen.

Jarvisma

Personally, I would look after number 1 and jump like a rat from a sinking ship!

I don't know alot about debts resulting from companies going into liquidation but I believe staff wages owed take priority over third party credit debts. So if it's any consolation you would probably get your money before any suppliers owed money would. But that's assuming there is any money left at the point of cessation.

Sorry I couldn't be more help, maybe someone else will be able to confirm or add anything?

zzzLazyDaisy

Failure to pay wages amounts to an 'unlawful deduction from wages' You do not have to leave your job, you can carry on working but inform your employer in writing that you require your wages to be paid on time in accordance with your contract. If they fail to do this, give them written notice that you intend to go to an Employment Tribunal. You can normally get the forms from the job centre, or some CABx also stock the forms.

It costs nothing to file a claim with the ET and once it is served on the company they will normally find a way to pay up.

As previously advised, if the company does go into liquidation the government will pay any overdue wages. BUT if they simply cease trading without declaring insolvency, this can be a problem.

Hopefully they will continue to pay your wages until you find another job, which hopefully will be soon!

timbellina

I've worked a bit on insolvencies, and while I hate to say it, the staff who generally lose out are those that are loyal and stick it out to the end.

Of course - plenty of companies have cash flow problems and get over it - but it sounds to me like you're in a good position to say whether that's going to happen or not. (And I bet no-one here would want to quote percentages).

If you "really" think the writing's on the wall; get your CV out there, big time. Even for temping. Tell your employer you aren't prepared to wait; if he wants to borrow money, go to a bank, not the staff. Make sure you're paid up to date, and leg it.

It sounds harsh - and it IS harsh. But it also means you'll be paid; and you'll be in a nice (hopefully) new job when your workmates are wondering why the gates haven't been unlocked this morning...

Tim

seven-day-weekend

I'd look for another job asap.

Jet

It's a difficult position I'm in. I like being here, my colleagues are nice blah blah, but the most important thing is it's local to me (I can walk) and the hours are flexible and can fit around the dire shortage of childcare in this area, not to mention the fact that the money is good for what I do.

So, I have been looking around for other work and even been for an interview but I really don't know if I should jump ship or not.

There are a few promises of significant orders in the next few weeks at my current employment - whether they materilise is, of course, a different matter!

The boss is putting up 2 of his rental properties as security for an increase in the business overdraft, so he must be fairly confident or he just feels he has no choice?