Boss can't afford to pay any statutory redundancy money but is NOT insolvent 23 July 2020 at 6:06PM in Redundancy & redundancy planning 8 replies 306 views

Zendreamer

The sole trader business I have worked for for  22 years is closing. I am being made redundant on 1st August. The boss cannot afford to pay his staff any statutory redundancy entitlements. He is going to wait until one of his creditors makes him bankrupt - which could take months, whereas I only have 6 months to make a claim to the Insolvency Service. However, as he is not OFFICIALLY insolvent, and I don't have a CN ref no . .. I am unable to make a claim.  My boss has no assets, therefore I assume there is no point going forward with an Employment Tribunal case. Is this correct? If so . . . what CAN I do? Any advice would be much appreciated . . . I seem to be between a rock and a hard place through no fault of my own. 

Grumpy_chap

So, you are now a creditor.  What happens if you are the creditor to make him bankrupt?  Does that have to involve a 6 month wait?

Sounds to me like the boss is counting on a delay while he squirrels away what assets and equity he has beyond reach?

Could you accept goods in lieu of redundancy?  Maybe the boss has a nice car that would be better on your drive than his?

I add that I have no knowledge on this so above is only my lay-man thoughts.

sharpe106

They can still apply to claim from the insolvency service. 

https://www.gov.uk/government/publications/financial-assistance-for-employers-unable-to-pay-statutory-redundancy-payments/financial-assistance-for-employers-unable-to-pay-statutory-redundancy-payments#:~:text=If%20an%20employer%20cannot%20afford%20to%20pay%20their%20employees%20redundancy,Insolvency%20Service)%20for%20financial%20assistance.&text=Any%20employer%20who%20is%20not%20subject%20to%20formal%20insolvency%20proceedings%20can%20apply.

Zendreamer

Hi Grumpy Chap . . . thank you for prompt response. However, he has NO assets or equity. There are no goods available to take in lieu of redundancy. I have a better car!

Zendreamer

Thanks so much Sharpe106 . . . that Gov UK link is EXTREMELY helpful! Will get on to it!

Zendreamer

If RPS refuses financial assistance for my boss . . . are there any other options? 

JCS1

If he cannot pay is debts when they become due (i.e. the redundancy money) then he is insolvent.

sharpe106

Basically only choice then will be to take him to court so he has to pay or goes insolvent if you win. 

Zendreamer

JCS1 - Yes, I agree. He IS insolvent . . . but he has not been made OFFICIALLY insolvent, and until that actually happens, there is no Insolvency Practitioner available to give me the required reference number in order to make a claim for my statutory rights to the RPS myself!

Sharpe106 -  thank you for the clarification. Fingers crossed the RPS will give him financial assistance.