Liquidation Changed to Furlough and now Redundancy.

bujin

HI All. I'll try and keep a fairly complicated scenario simple and would be really grateful for any help for my daughter.

My daughter is a TEFL teacher working in a privately run school. On March the 25th, the staff teachers and Admin staff alike, were told by the owner that the School could no longer continue and it would be liquidated within two days 27th. She was unable to pay them for March, which she only told them when informing them about liquidation. Then, a few weeks later (when Furlough was in place by Govt.) the owner informed staff that she would now be able to furlough staff, as there was the possibility of a buyer for the school. She said she'd keep them informed about how things were going by the end of April, but didn't, so staff have been emailing and last week she informed them she was setting up a zoom meeting, because she had not been successful in selling the school.

At the meeting the owner informed them, the school would continue but online and that most staff would be made redundant, this includes my daughter. My daughter has set up a free 30min call to an employment solicitor, but we wanted to see if we could add other advice with it and answer some questions too. Our questions are, will my daughter be able to claim the unpaid March pay, notice pay, unpaid holiday pay and as she's worked for over two years for the company, redundancy pay. This was all very straightforward when the company was to be liquidated but it's a little confusing now.

Any help anyone can give will be so appreciated, as obviously my daughter's quite stressed and upset by this turn of events. Fortunately she has a strong support and family she can fall back on unlike some at this time, so it could be worse and she's thankful for that. Thanks in advance.

bujin

Just an add on here. I've realised that if she was considering liquidation, it doesn't sound as though she'll have the money to pay staff redundancy. Would that mean that they'd get nothing if that was the case?

sharpe106

A company liquidates basically when it runs out of money so it can’t meet it expenses or is unlikely too. If the company is liquidated then your daughter would be able to access government assistance.

 

But it sounds like as they are going online only they will keep on trading so the company will carry on. However the majority of jobs by the sound of it will be made redundant. So what your daughter get will depend on the contract (if the company can’t pay it then you may have to take it further).

 

How long has she worked for the company for? What notice period does she need to be given?

 

The next issue is going to the pay from March too now. Which is a separate issue to the redundancy. With you saying the owner stated she could furlough the staff, did she and has your daughter be paid this? What was agreed when they stopped working? As if she did not agree to be furloughed and the employer did not claim furlough then the original contract is still in effect.

bujin

Thank you. From the top re liquidation. I presume there is a situation where a company would simply have to become Insolvent? One of the teachers had her redundancy meeting yesterday and when she asked the owner, how she was going to afford all the redundancy payments etc, (given that her alternative solution to liquidation ie selling the company, had fallen through) she replied by saying, No! It will come form the Govt. but she is proposing to keep the company running? Surely if she's keeping the Company going she's stating she's solvent but if she can't pay her debts then she'll have to become insolvent won't she?

On further investigation it looks like the owner is only keeping her own job and the director of studies jobs going, so I don't know how she proposes to continue teaching online or anywhere else without teachers.

My daughter had worked for the company for over 3 years at the time of initial Redundancy ie 27/3/20. She should be given 3 weeks notice but I believe there may be some suggestion (online) that employers might only pay 80% of notice pay while staff are receiving only 80% on furlough.

Unfortunately the owner has not paid any staff their March pay. At the time she furloughed staff she said that once the company was sold, that those debts would be met by the new owner and if she didn't sell the company, then the company would be liquidated.

She did not suggest that the company would or could carry on in any form apart from the successful sale scenario. I think if she had said there was actually a third possible outcome ie, not selling,not liquidating but carrying on in a different form,  I'd have probably advised my daughter not to agree to being furloughed, because it would have been obvious she wouldn't have the means to pay staff redundancies, if she couldn't even pay their March wages. Inadvertently my daughter has signed something (being furloughed) and I don't think now it was necessarily the right thing to do, but then she wasn't given all the facts.

Tigsteroonie

One of the first things to clarify will be whether the school (presumably a company or charity) is actually going to continue as the same legal organisation; or whether she is liquidating the existing organisation and setting up a new one. If the latter, which is more likely, then your daughter would be made redundant and it's possible that liquidation with no funds could mean that she is not paid what she is owed. 

General_Grant

Ask your daughter to access her HMRC file to see what the organisation has reported as far as pay is concerned.  If she was properly furloughed then she should have been paid as the company would have been claiming that 80%.  You have said staff haven't been paid for March but what about April?

bujin

Tigsteroonie said:

One of the first things to clarify will be whether the school (presumably a company or charity) is actually going to continue as the same legal organisation; or whether she is liquidating the existing organisation and setting up a new one. If the latter, which is more likely, then your daughter would be made redundant and it's possible that liquidation with no funds could mean that she is not paid what she is owed. 

Thanks. As far as the owner's letter sets out the Company will actually continue in it's existing guise, with the changes being a reduction in staff and changing the way it delivers lesssons, she has not stated that she is intending to liquidate then set up another company.

You say if there's no liquidation funds wouldn't she be able to aply to the Govt? That's what she had been told when they were first made redundant back in March?

bujin

General_Grant said:

Ask your daughter to access her HMRC file to see what the organisation has reported as far as pay is concerned.  If she was properly furloughed then she should have been paid as the company would have been claiming that 80%.  You have said staff haven't been paid for March but what about April?

Yes sorry, I focused on the unpaid March payment because, the Company through March was working normal hours, fully up and running and staff were not aware of any problems, which is why it was a shock having got to the end of March to be told they wouldn't be paid for the work they'd already done. They only knew because they didn't receive their wage as normal in their bank accounts. At that point they were told they'd be made redundant for the first time.

However they were then furloughed a week or so later and have received payments at 80% through April to now.

sharpe106

Ignoring redundancy for this question what is your daughter currently owed? has seen now been paid for march and the furlough normally?
Back to redundancy if the company keeps running then she can not access the government scheme, the scheme is there to support employees basically when a company goes bankrupt, not to help business cut the bills or everybody will do that.
 I would think even though she has said that the company is carrying on you will probably find legally it becomes a new business, i.e. makes that company insolvent. Which is they do you can then access the government scheme. So that is probably your best hope for actually seeing any money without having to fight for it. 
The being furloughed does not really make any difference to the redundancy period, yes you could argue the 80/100% notice period but 20% on a few weeks is not really anything worth worrying over. It is done. 
It sounds like unless you can prove that they are becoming a new company you are going to have seek further advice, start with ACAS as it looks like they are going to refuse to pay. So you need to discuss next options with them. 

bujin

Thanks. So, my daughter is owed pay for the normal hours of work done in March and as said above, no she still hasn't been paid for March, but has been receiving her Furlough pay successfully, for April and May.

Yes, I understand she won't be able to access help from the Govt unless the Company liquidates and becomes a new company. My reluctance in believing liquidation is what she intended to do are one, because I don't believe she understands that the responsibility is hers to pay redundancies, hence her surprise when a staff member asked her if she could afford it and responded by saying the Govt will pay. Two, she had intended liquidising the company in March, so I don't see why she wouldn't just state that's the state of affairs again now, as she had warned staff it was always a possibility, but she hasn't made any mention of Insolvency or referred to how they would go through that process (something she did do in March).

The other thing which has come to light today is that when staff were told originally in March that they were going to be made redundant, but before furlough, two staff members took voluntary redundancy immediately. They've both contacted my daughter today as a warning on hearing she was facing redundancy, stating that they have not been paid any money, wages or redundancy and they are taking it to Tribunal!

When my daughter has her redundancy meeting with the owner on Tuesday she can ask her directly if the Company will be liquidated before then starting anew. I'm not sure this is so much a refusal to pay by the owner more a not being aware of what she's supposed to do, but also not having the means to pay them. If she couldn't afford to pay wages in March, the School hasn't earned any money since so I can't see she'd be capable unless she's somehow mangaed to get a grant or something.

sharpe106

By the sounds of it whatever happens she is not going to pay voluntarily , either they have no money or do not want to. Either was is irrelevant to your daughter. 
At her meeting she needs to find out

1. How do they plan to pay for March wages
2. Does the company plan to be liquidated
3. If they do not plan to be liquidated how do they plan on paying the redundancy pay.