Sole Director Limited Company- how do I manage redundancy/lay off linked to Covid 19?

pleasedelete

I am the sole director and sole fee earner. I have 1 employee and I am an employee. Work has completely dried up today and this is likely to be for  at least 12 weeks.There may be an odd remote access job after Easter and a 3 day job next week has not been cancelled yet but  I will find out this afternoon. 

Employee and I have both worked for the company for 9 years. Looking at the cash flow I can keep my employee on for this period as it will be roughly the same amount as their redundancy entitlement. If I end up having to make them redundant anyway after 12 weeks the business is unlikely to have the cash to do this unless I pay personally through loaning the company the money.  I will need to stop paying myself this week in order to preserve the money to pay them. I do have corporation tax and VAT set aside as it has just been the year end. I have chased all those who owe me money today, they are public sector and so they will pay. 

Am I likely to be able to sign on? £73 a week is better than nothing. 
Is there something else I could do that I haven't  thought of? 
Any advice?

Annisele

If you have a layoff clause in your employee's contract, you could consider doing that. Even if you don't have a layoff clause, you could talk to them about whether they'd agree to a temporary layoff.

If you can hold on for a few days, that might be worth doing. The government is making IMO encouraging noises about support for small businesses, and the picture on that will hopefully become clearer soon.

epm-84

Annisele said:

If you have a layoff clause in your employee's contract, you could consider doing that. Even if you don't have a layoff clause, you could talk to them about whether they'd agree to a temporary layoff.

If you can hold on for a few days, that might be worth doing. The government is making IMO encouraging noises about support for small businesses, and the picture on that will hopefully become clearer soon.

Be careful about saying 'lay-off' unless there's a clause in the contract mentions unpaid or reduced pay lay-offs then the employee is still legally entitled to full pay even if they agree to being laid off: https://www.gov.uk/lay-offs-short-timeworking

epm-84

pleasedelete said:

I am the sole director and sole fee earner.  I have 1 employee and I am an employee.
...
 I will need to stop paying myself this week in order to preserve the money to pay them. 
...
Am I likely to be able to sign on? £73 a week is better than nothing. 

Something to be careful is all employees need to be paid at least the minimum wage, no employee can work for less than that even if they agree to.   If you're not working at all then you could put in a benefits claim saying you've had to reduce your hours to 0 due to a lack of work.  However, if you're working and not paying yourself so that you have money to pay your employee then they could argue that you're deferring your wages, rather than not working.

Hermann

Can you organise your reduced workload so that your employee could be furloughed in three week blocks, returning for as long as required in between, this would give you a refund of some of their wages?

Directors can also furlough their PAYE element if they too can fit the three week no work rule.