Can’t Afford To Pay Employees?
Can’t afford to pay employees due to Coronavirus COVID-19 PANDEMIC? The COVID19 pandemic has had a significant impact on peoples lives and businesses throughout the UK.
When you have no funds to pay my staff, it is therefore stressful and affects both parties.
Employees usually rely on the company for income. As does your company depend on the employees to then operate.
Paying Your Employees
Deciding how much to pay employees along with ways of paying salaries is one of the first decisions a business owner takes when commencing trading. Getting the right balance remains important as this may affect employee performance and loyalty. So when a business enters financial difficulties, paying your staff has a major pressure point on the owner. If you require to reduce operating cost, it is vital redundant is dealt with correctly and that redundancy payments are paid if continuing to trade.
For further assistance, contact Jonathan Waller on 0800 612 5448.
Reasons why Company can’t Afford to Pay My Employees?
- Lack of cash flow.
- May the problem be short term?
Notwithstanding, it may, therefore, be a more significant issue?
- sales decline;
- a bad debt;
- loss of a contract;
- or slow-paying debtors.
Can’t Afford To Pay Employees? – So What Options Do I Have?
As a director, you must ensure you are not trading insolvently. If your inability to pay employees is a short term issue and you can identify why and then correct the cash flow, then excellent. Once you are then assured the business is a going concern. Then consult HBG Advisory for assurances moving forward. 0800 612 5448
If your company has potential issues, it can’t resolve and drifts into Insolvency; then you may need to cease trading to avoid trading while insolvent.
At this point, you need to seek protection. Consult a Licensed Insolvency Practitioner at HBG Advisory.(The Team at HBG Advisory). We will deal with creditor claims and employee issues such as employee redundancy pay
If, you consider the problem is short term only, then:
- Speak with the employees requesting extra time to pay. It would be best if you were assured of your companies viability moving forward.
Considering Insolvency. Business formally Insolvent
If your business is not viable and insolvent, then directors’ have a duty to protect creditors of the business ensuring the position does not worsen for creditors.
Failing to pay employees, then means they are a creditor of the business.
Directors should seek urgent advice from a licensed insolvency practitioner ensuring you comply with your directors obligations. Further, you need to plan the best outcome for your business employees.
We at HBG Advisory will guide you through the available options to your business.
When employees are furloughed.
When you have placed your employees on furlough, you may not ask them to perform any work that:
- makes money for your business or in anyway associated with your business.
- provides services for your business or any associated business.
Apply For A Loan
As with above, you need assurance of your companies viability. Ensure any short gain by a loan, does not add to long term debt which the company may fail to pay in the long run.
How Viable Is Your Business Plan?
If your business plan demonstrates robust growth with profit, a company may continue trading while paying its creditors.
Invoice factoring applies to B2B type businesses. A business may raise commercial finance based on the delivered value of it’s either singular or batched invoices. Helps when companies grow faster than cashflow.
Take care when considering this option. If sales are declining, then you may, therefore, add to your operating costs.
Numerous commercial finance options exist with varying interest rates.
If you have a business model viable to your business then often bank loans may be the cheapest option.
What Else! If All Else Fails?
What can you do if your employer can’t pay you?
If your employer has not paid your wages for work you have carried out. Under UK law, any unauthorised deduction from wages then entitles you to proceed with a claim using an employment tribunal.
It is considered a breach of your employment contract to with hold monies without your authority as per your employment contract.
Changes made May 2014 to employment tribunal means that before bringing any tribunal claim, you now need to complete an Acas Early Conciliation Notification Form.
If you are confident your business, then has a future, but no ability to pay employees, then HBG Advisory can advise on your next move.
Contact: Jonathan Waller on 0800 612 5448
For help with Directors Redundancy Claim.