Redundancy before/after Liquidation

roxy48
roxy48 Posts: 58
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edited 18 April 2019 at 10:57AM in Redundancy & redundancy planning
I run a small consultancy; there were some good years but business has fallen away and given my age I'm likely to give it another year, then either Liquidate the company or take it home for one more year, but there is not really enough work now for more than one person, let alone if the small amount of business we do have is not retained. It is unlikely we will get any new contracts.

I have a colleague that has worked with me/for me for a long time and although the business can no longer afford him I would like to do the right thing which in my mind would be to pay out at least the statutory minimum redundancy, while the company still has any money. This has been discussed and it was not unexpected.

To be honest I would prefer to do this now while we still have the funds (courtesy of the good years) and to allow me to run down the company in the next year or two without feeling guilty or with big liabilities at the end.

The thing is, if I don't take on his responsibilities, I could find a small amount of work that I could offer him subsequent to redundancy and we could both work when needed. This work wouldn't be guaranteed, so I guess I could either offer him a New contract of Employment (zero or variable hours) or, if he wants to set up as Self Employed then we could work out something that way. He's in his sixties and I don't know whether he will seek other (full) employment but possibly not.

This to me seems a better option than retaining current employment, cutting his hours, then paying redundancy down the line, when I might not be able to afford it. I'm not even sure how changing his contract of employment and cutting his hours would affect his future redundancy entitlements

I guess I am not sure whether I am allowed to make him redundant and then perhaps after a short gap reemploy him or give him some work as self employed.

Is there a right way to do this?

Thanks
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  • roxy48
    roxy48 Posts: 58
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    Hello everyone.
    Thanks for viewing but no replies.

    I had hoped someone might have had some advice.

    But I guess this part of the forum is more for the person likely to suffer redundancy rather than the business owner who might want to do it in a fair way.
    It's never too late.
    Cheers Roxy
  • lincroft1710
    lincroft1710 Posts: 17,452
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    Make him redundant now and then just let the business run its natural course. Once his employment has ceased, do not re-employ him in any way or form.
    If you are querying your Council Tax band would you please state whether you are in England, Scotland or Wales
  • roxy48
    roxy48 Posts: 58
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    Hi Lincroft,

    Many thanks for the reply. It can be very difficult to decide whether someone is redundant. I can't afford him fulltime on current costs, thats for sure.

    You were quite definitive not to re-employ or use him in any way, even though it might be something that we both might favour.

    I wonder if that was 'legal advice' or just what you think might be best for all parties. I guess I was hoping you might say self employed, but there would be problems there.


    Just as a matter of interest, did anyone think I might have been better on the Small business forum?

    Cheers, Roxy
  • getmore4less
    getmore4less Posts: 46,882
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    Technically you only have to wait a week many place wait 3 months(time out ET) before any work is offered.

    The starting point is the current contract does it allow variable hours?

    What does the employee want to happen?
  • roxy48
    roxy48 Posts: 58
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    Hi there 'get more for less',

    Thanks for the reply. The current contract is a standard full time 37.5 hours, so if more work was offered as an employee I guess it would have to be as a variable/ zero hours contract as there would be no guarantees.

    The employee is I guess 'considering his options' but has so far offered some positivity around continuing the role (after a short break) in a smaller capacity for as long as possible.

    He is working out his 3mths towards redundancy at present. I don't think he will be seeking other (Full-time) employment though I guess if he went self employed he could consider other work as well, if he had a mind to.

    Cheers
  • lincroft1710
    lincroft1710 Posts: 17,452
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    In your opening post you state " there is not really enough work now for more than one person" therefore you can no longer afford to employ him. If you have a final break with him, you can concentrate on perhaps keeping the business going a bit longer on your own.
    If you are querying your Council Tax band would you please state whether you are in England, Scotland or Wales
  • roxy48
    roxy48 Posts: 58
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    Lincroft,
    Ok thanks. I hear where you are coming from.

    There is not enough work for more than a whole person but we do have different skills, and different roles currently so maybe we could each do a half job.

    As we are both the wrong side of sixty and me somewhat older I am hoping I can eke out what time the business has left and if we can somehow share the workload with our different skills, reducing all costs, getting the redundancy out of the way but thereafter having less commitment or liability, but both us us taking less.

    As the director/owner I can happily take that but for the employee I am seeking to find the best way (employed or self employed) to continue to use my colleague with lower cost if he is interested.


    Thanks for all your input.
  • getmore4less
    getmore4less Posts: 46,882
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    There will be a solution but get the notice and redundancy out the way first.

    Make sure all accrued holiday is used during the notice period

    Check the redundancy payment you are looking at upto 30 weeks pay if over 60 and has worked for you 20years or more.

    You could cut your redundancy bill if he is willing to go onto shorter hours.

    A long shot but has this sort of service got any demand, any chance you could get some young blood in with the enthusiasm to try to build more business and you work on some succession planning to be able to sell of a going concern rather than just wind it down.
  • roxy48
    roxy48 Posts: 58
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    Thanks; Yes I know if the hours reduced the redundancy might be cut but didn't want to do that. And sadly no hope of expanding or selling, its just not that sort of business. Thanks for all your advice.
  • getmore4less
    getmore4less Posts: 46,882
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    As you are happy to cash out the employee with a reasonable payoff due to lack of work(a redundancy situation) if you want to fully protect yourself you could use a settlement agreement.
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