LTD company employment nightmare!
Discussion
This is a cracker - any advice gratefully received.
My partner runs a ltd co with some other relations. It's a long story but basically they started this company up from the embers of a larger family company which had to be closed down for a variety of reasons.
They took on one member of staff from that original company on a new contract... well they thought it was new. Something slipped through the net and unfortunately the contract named the previous co. as the employer. Yes, I know. Slapped wrists.
Anyway. The company has entered some stormy financial waters and as a result needed to dispense with the services of that one employee after less than one year.
After notifying the employee that their employment would be terminated (within the contractual notice period and paid to the end of the month)
the company and employee parted company.
Shortly after a letter was received stating that as the contract named the original family business that the former employee wanted more money as if her term of employment had been continuous (which I guess in court it could look like).
So the former employee asked for a payment equal to the statutory redundancy payment + the months payment originally paid + taxes paid. Not a lot of money in total (>5k).
My partners company paid up but termed it as payment in final settlement without admitting any liability wrt to the original complaint re the contract. All done without prejudice.
The former employee took the momney, refused to sign the final settlement and has now contracted a solicitor to pursue a legal remedy.
So money saving on lawyers is out of the window...
If my partner just closed the company (it's on pretty shaky ground as it is) what would be the likely ramifications?
and
My partner knows that this persons spouse is shagging someone else. Should she throw this into the mix for good effect
?
To be honest, everything my Partners company has done has been in good faith and this person is using that to her advantage. What is the best way to end this legal problem asap?
My partner runs a ltd co with some other relations. It's a long story but basically they started this company up from the embers of a larger family company which had to be closed down for a variety of reasons.
They took on one member of staff from that original company on a new contract... well they thought it was new. Something slipped through the net and unfortunately the contract named the previous co. as the employer. Yes, I know. Slapped wrists.
Anyway. The company has entered some stormy financial waters and as a result needed to dispense with the services of that one employee after less than one year.
After notifying the employee that their employment would be terminated (within the contractual notice period and paid to the end of the month)
the company and employee parted company.
Shortly after a letter was received stating that as the contract named the original family business that the former employee wanted more money as if her term of employment had been continuous (which I guess in court it could look like).
So the former employee asked for a payment equal to the statutory redundancy payment + the months payment originally paid + taxes paid. Not a lot of money in total (>5k).
My partners company paid up but termed it as payment in final settlement without admitting any liability wrt to the original complaint re the contract. All done without prejudice.
The former employee took the momney, refused to sign the final settlement and has now contracted a solicitor to pursue a legal remedy.
So money saving on lawyers is out of the window...
If my partner just closed the company (it's on pretty shaky ground as it is) what would be the likely ramifications?
and
My partner knows that this persons spouse is shagging someone else. Should she throw this into the mix for good effect
?To be honest, everything my Partners company has done has been in good faith and this person is using that to her advantage. What is the best way to end this legal problem asap?
Eric Mc said:
Hitman?
Could be. My partner is so pissed of becuase they extended this former employee every privelege, e.g. working from home during summer holidays, decent pay rise, free allocation of working hours if the job got done... It's a real shame that the persons hasn't taken it as one of those blows on the chin life offers you as a good thing that came to an end. Instead they want to f
k the company over.Edited by Dusty Rhodes on Tuesday 19th August 12:02
The fact that the old company name was inadvertantly inserted into the new company contract does not, in itself, mean that the new employment had anything to do with the old.
However, the overall circumstances of the changeover from the old to the new company might indicate precisely that. If that is the case, unless the new contract specifically states that the employee was waiving any rights associated with the old employment it might be seen by an employment tribunal or a judge (if it goes that far) that the new employment was really a continuation of the old. Employment regulations do give employees who find themselves working for a new company which has taken over the business of an old one one many of the rights they would have had if their old employment had continued.
How different was the new business (and the new employment) to the old one?
However, the overall circumstances of the changeover from the old to the new company might indicate precisely that. If that is the case, unless the new contract specifically states that the employee was waiving any rights associated with the old employment it might be seen by an employment tribunal or a judge (if it goes that far) that the new employment was really a continuation of the old. Employment regulations do give employees who find themselves working for a new company which has taken over the business of an old one one many of the rights they would have had if their old employment had continued.
How different was the new business (and the new employment) to the old one?
Eric Mc said:
The fact that the old company name was inadvertantly inserted into the new company contract does not, in itself, mean that the new employment had anything to do with the old.
However, the overall circumstances of the changeover from the old to the new company might indicate precisely that. If that is the case, unless the new contract specifically states that the employee was waiving any rights associated with the old employment it might be seen by an employment tribunal or a judge (if it goes that far) that the new employment was really a continuation of the old. Employment regulations do give employees who find themselves working for a new company which has taken over the business of an old one one many of the rights they would have had if their old employment had continued.
How different was the new business (and the new employment) to the old one?
The business was very similar. The problem was that the old company had an asset (a building) that actually contributed more to the business than the supposedly trading side of the business. That trading business has now been closed down and the company is purely a property ownership co. now.However, the overall circumstances of the changeover from the old to the new company might indicate precisely that. If that is the case, unless the new contract specifically states that the employee was waiving any rights associated with the old employment it might be seen by an employment tribunal or a judge (if it goes that far) that the new employment was really a continuation of the old. Employment regulations do give employees who find themselves working for a new company which has taken over the business of an old one one many of the rights they would have had if their old employment had continued.
How different was the new business (and the new employment) to the old one?
The new business comprises some sharholders of the original business and one of the directors.
The former employee was made redundant but due to the original employment duration (under two uears) no redundancy was necessary. The former employee was given notice and paid up to the end of the notice period. There was then a couple of months before they were taken on by the new business.
Edited by Dusty Rhodes on Tuesday 19th August 12:21
The key would be whether the new employment was merely a continuation of the old.
To a neutral (like me) it would appear that the employee has a strong case for arguing that it was. This could work against you at a tribunal or in a court. I don't suppose that there were any clauses in the new contract specificially stating that this was a brand new employment and specifically stating that all accruing rights from the old company were NOT to be transferred to the new?
The fact that the old company's name was quoted in the new contract indicates to me that the new employment contract was a cut and paste job and therefore was identical to the old one. This again will not help your cause.
If her duties at the new company were the same as the old, again she has a case.
Are there any arguments you could use that the new employment had absolutely nothing to do with the old?
To a neutral (like me) it would appear that the employee has a strong case for arguing that it was. This could work against you at a tribunal or in a court. I don't suppose that there were any clauses in the new contract specificially stating that this was a brand new employment and specifically stating that all accruing rights from the old company were NOT to be transferred to the new?
The fact that the old company's name was quoted in the new contract indicates to me that the new employment contract was a cut and paste job and therefore was identical to the old one. This again will not help your cause.
If her duties at the new company were the same as the old, again she has a case.
Are there any arguments you could use that the new employment had absolutely nothing to do with the old?
Eric Mc said:
The key would be whether the new employment was merely a continuation of the old.
To a neutral (like me) it would appear that the employee has a strong case for arguing that it was. This could work against you at a tribunal or in a court. I don't suppose that there were any clauses in the new contract specificially stating that this was a brand new employment and specifically stating that all accruing rights from the old company were NOT to be transferred to the new?
The fact that the old company's name was quoted in the new contract indicates to me that the new employment contract was a cut and paste job and therefore was identical to the old one. This again will not help your cause.
If her duties at the new company were the same as the old, again she has a case.
Are there any arguments you could use that the new employment had absolutely nothing to do with the old?
Eric has it.To a neutral (like me) it would appear that the employee has a strong case for arguing that it was. This could work against you at a tribunal or in a court. I don't suppose that there were any clauses in the new contract specificially stating that this was a brand new employment and specifically stating that all accruing rights from the old company were NOT to be transferred to the new?
The fact that the old company's name was quoted in the new contract indicates to me that the new employment contract was a cut and paste job and therefore was identical to the old one. This again will not help your cause.
If her duties at the new company were the same as the old, again she has a case.
Are there any arguments you could use that the new employment had absolutely nothing to do with the old?
I like the bit about you paying him off without him signing the "full and final settlement" letter.
Good work.
Vesuvius 996 said:
Eric Mc said:
The key would be whether the new employment was merely a continuation of the old.
To a neutral (like me) it would appear that the employee has a strong case for arguing that it was. This could work against you at a tribunal or in a court. I don't suppose that there were any clauses in the new contract specificially stating that this was a brand new employment and specifically stating that all accruing rights from the old company were NOT to be transferred to the new?
The fact that the old company's name was quoted in the new contract indicates to me that the new employment contract was a cut and paste job and therefore was identical to the old one. This again will not help your cause.
If her duties at the new company were the same as the old, again she has a case.
Are there any arguments you could use that the new employment had absolutely nothing to do with the old?
Eric has it.To a neutral (like me) it would appear that the employee has a strong case for arguing that it was. This could work against you at a tribunal or in a court. I don't suppose that there were any clauses in the new contract specificially stating that this was a brand new employment and specifically stating that all accruing rights from the old company were NOT to be transferred to the new?
The fact that the old company's name was quoted in the new contract indicates to me that the new employment contract was a cut and paste job and therefore was identical to the old one. This again will not help your cause.
If her duties at the new company were the same as the old, again she has a case.
Are there any arguments you could use that the new employment had absolutely nothing to do with the old?
I like the bit about you paying him off without him signing the "full and final settlement" letter.
Good work.
Good work indeed.
Okay will check the paperwork Eric.
If all else fails (given that the former employee is in no way out of pocket and we already know 'it' has a new job) we could just draw a line under the whole sorry affair and close the company right?
Why?
Have you quantified the potential costs the company might incur if she was to receive all she thinks she is entitled to?
Is there a compromise position?
What would be the costs of shutting the company down and setting up again with another new company (you've already done this once before)?
What has your accountant got to say about all this?
Have you quantified the potential costs the company might incur if she was to receive all she thinks she is entitled to?
Is there a compromise position?
What would be the costs of shutting the company down and setting up again with another new company (you've already done this once before)?
What has your accountant got to say about all this?
Eric Mc said:
Why?
Have you quantified the potential costs the company might incur if she was to receive all she thinks she is entitled to?
Is there a compromise position?
What would be the costs of shutting the company down and setting up again with another new company (you've already done this once before)?
What has your accountant got to say about all this?
I will answer questions and more shortly. Lunch and a meeting beckon. Thanks for the info so far.Have you quantified the potential costs the company might incur if she was to receive all she thinks she is entitled to?
Is there a compromise position?
What would be the costs of shutting the company down and setting up again with another new company (you've already done this once before)?
What has your accountant got to say about all this?
Eric Mc said:
Why?
Have you quantified the potential costs the company might incur if she was to receive all she thinks she is entitled to?
Is there a compromise position?
What would be the costs of shutting the company down and setting up again with another new company (you've already done this once before)?
What has your accountant got to say about all this?
We think we know how much she would be entitled to and it's really not a lot of money but it is enough to push a struggling company over.Have you quantified the potential costs the company might incur if she was to receive all she thinks she is entitled to?
Is there a compromise position?
What would be the costs of shutting the company down and setting up again with another new company (you've already done this once before)?
What has your accountant got to say about all this?
Hopefully we can find a compromise. We thought we had with the original deal which was at her suggestion but she pulled out of that when we didn't quite sew the net up tight.
We probably wouldn't start up again. Too much pain. It would be a shame but the risk of re-establishing again would be too great.
Legal and accountancy advice is being sought now.
It's a real PITA but it's just one of those things where if you don't quite do things right you get rogered. I have the same concerns about the two companies being indistiguishable in court so I need to do some reading up on how well the first company was closed down and what she signed. Unfortunately in a court's eyes I doubt there would be much clear water between the two.
SLacKer said:
What a gold digging bh!!!!!!! Not satisfied with a technicality leading to a windfall she then pursues a further technicality to attempt to extort more money. Model employee.......
TBH if you treat this sort of stuff as a hobby you're going to get bit. Painful lesson learnt. The real shame is now if things do get moving again there is no way we'll take on another staff member. Keep them all at arms length.h!!!!!!! Not satisfied with a technicality leading to a windfall she then pursues a further technicality to attempt to extort more money. Model employee.......Edited by Dusty Rhodes on Tuesday 19th August 13:47
Dusty Rhodes said:
So the former employee asked for a payment equal to the statutory redundancy payment + the months payment originally paid + taxes paid. Not a lot of money in total (>5k).
My partners company paid up but termed it as payment in final settlement without admitting any liability wrt to the original complaint re the contract. All done without prejudice.
The former employee took the momney, refused to sign the final settlement and has now contracted a solicitor to pursue a legal remedy.
If we assume that TUPE transfer applies and the employment is continuous then was the statutory redundancy paid for the whole term of 'continuous' employment? Reading the above, it would appear so?My partners company paid up but termed it as payment in final settlement without admitting any liability wrt to the original complaint re the contract. All done without prejudice.
The former employee took the momney, refused to sign the final settlement and has now contracted a solicitor to pursue a legal remedy.
In which case, what legal remedy is the ex-employee pursuing?
Assuming you followed the standard rules notifying of intent to make a redundancy, had a meeting, later announced a decision, defined notice period and then made appropriate payment (although in this case you had to be prompted) then what legal recourse does your ex-employee think they have!
An Employment Tribunal is the only place that this ex-employee will be heading. For which they will need a case against you as the employer. Assuming your paperwork is in order and the redundancy payment made in line with :
http://www.berr.gov.uk/employment/employment-legis...
and paid tax-free, then there is no case. At which point, I have to ask, is there anything else that the ex-employee could pursue to a tribunal eg. discrimination, bullying etc as I reckon this is one of 3 things:
1) You screwed up your paperwork somewhere along the line and they are claiming unfair dismissal.
1) They're calling your bluff and expecting some money
2) The redundancy thing is a red-herring and its actually something else.
apguy said:
Dusty Rhodes said:
So the former employee asked for a payment equal to the statutory redundancy payment + the months payment originally paid + taxes paid. Not a lot of money in total (>5k).
My partners company paid up but termed it as payment in final settlement without admitting any liability wrt to the original complaint re the contract. All done without prejudice.
The former employee took the momney, refused to sign the final settlement and has now contracted a solicitor to pursue a legal remedy.
If we assume that TUPE transfer applies and the employment is continuous then was the statutory redundancy paid for the whole term of 'continuous' employment? Reading the above, it would appear so?My partners company paid up but termed it as payment in final settlement without admitting any liability wrt to the original complaint re the contract. All done without prejudice.
The former employee took the momney, refused to sign the final settlement and has now contracted a solicitor to pursue a legal remedy.
In which case, what legal remedy is the ex-employee pursuing?
Assuming you followed the standard rules notifying of intent to make a redundancy, had a meeting, later announced a decision, defined notice period and then made appropriate payment (although in this case you had to be prompted) then what legal recourse does your ex-employee think they have!
An Employment Tribunal is the only place that this ex-employee will be heading. For which they will need a case against you as the employer. Assuming your paperwork is in order and the redundancy payment made in line with :
http://www.berr.gov.uk/employment/employment-legis...
and paid tax-free, then there is no case. At which point, I have to ask, is there anything else that the ex-employee could pursue to a tribunal eg. discrimination, bullying etc as I reckon this is one of 3 things:
1) You screwed up your paperwork somewhere along the line and they are claiming unfair dismissal.
1) They're calling your bluff and expecting some money
2) The redundancy thing is a red-herring and its actually something else.
Her case seems to be built around the fact that she would be due more money if the redundancy had be continuos but the extra money would be limited i.e. less than 2k. So I'm not quite sure what she is hoping to achieve apart from more cash.
She is shouting about some unpaid employers NI (about £400) but this was sorted ages ago and paid up by the company. It was a clerical oversight. She seem to be suggesting that there was a deliberate attempt to not pay it.
I didn't mention this before as I really don't see the relevance.
Dusty Rhodes said:
Vesuvius 996 said:
Eric Mc said:
The key would be whether the new employment was merely a continuation of the old.
To a neutral (like me) it would appear that the employee has a strong case for arguing that it was. This could work against you at a tribunal or in a court. I don't suppose that there were any clauses in the new contract specificially stating that this was a brand new employment and specifically stating that all accruing rights from the old company were NOT to be transferred to the new?
The fact that the old company's name was quoted in the new contract indicates to me that the new employment contract was a cut and paste job and therefore was identical to the old one. This again will not help your cause.
If her duties at the new company were the same as the old, again she has a case.
Are there any arguments you could use that the new employment had absolutely nothing to do with the old?
Eric has it.To a neutral (like me) it would appear that the employee has a strong case for arguing that it was. This could work against you at a tribunal or in a court. I don't suppose that there were any clauses in the new contract specificially stating that this was a brand new employment and specifically stating that all accruing rights from the old company were NOT to be transferred to the new?
The fact that the old company's name was quoted in the new contract indicates to me that the new employment contract was a cut and paste job and therefore was identical to the old one. This again will not help your cause.
If her duties at the new company were the same as the old, again she has a case.
Are there any arguments you could use that the new employment had absolutely nothing to do with the old?
I like the bit about you paying him off without him signing the "full and final settlement" letter.
Good work.
Good work indeed.
Okay will check the paperwork Eric.
If all else fails (given that the former employee is in no way out of pocket and we already know 'it' has a new job) we could just draw a line under the whole sorry affair and close the company right?
Okay-dokay. So the ex-employee is only claiming the missing statutory redundancy.
From reading your previous posts, it would appear that an Employment Tribunal may take the view that TUPE applies and its continuous employment. In which case, it would be easier and less costly to pay the missing statutory redundancy, rather than defend a case that is likely to fail.
From reading your previous posts, it would appear that an Employment Tribunal may take the view that TUPE applies and its continuous employment. In which case, it would be easier and less costly to pay the missing statutory redundancy, rather than defend a case that is likely to fail.
Dusty Rhodes said:
The former employee was made redundant but due to the original employment duration (under two uears) no redundancy was necessary. The former employee was given notice and paid up to the end of the notice period. There was then a couple of months before they were taken on by the new business.
Assuming I have read your previous posts correct; as the person had 2 years prior employment at the old business and 1 year at the new (+2 months absence) then you're only looking at 3 weeks pay @ £330 a week. Assuming ex-employee is between 22-40 and has served 3 complete years. So less than an grand.Edited by apguy on Tuesday 19th August 15:09
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