Business closing - no Redundancy?
Discussion
Hello PH HR Dept
A friend is working for a ltd. co. business which the owner (sole practitioner effectively) has decided to close for their own personal reasons (it's not insolvent)
The owner (the sole Director) has given the person 1 month notice but is refusing to offer redundancy pay.
My friend has worked there for 4 years and very much wants / needs a reference but also wants not to be cheated out of her redundancy (if in fact she entitled to any).
Any thoughts please on the legal position and how best to proceed?
A friend is working for a ltd. co. business which the owner (sole practitioner effectively) has decided to close for their own personal reasons (it's not insolvent)
The owner (the sole Director) has given the person 1 month notice but is refusing to offer redundancy pay.
My friend has worked there for 4 years and very much wants / needs a reference but also wants not to be cheated out of her redundancy (if in fact she entitled to any).
Any thoughts please on the legal position and how best to proceed?
Canon_Fodder said:
Hello PH HR Dept
A friend is working for a ltd. co. business which the owner (sole practitioner effectively) has decided to close for their own personal reasons (it's not insolvent)
The owner (the sole Director) has given the person 1 month notice but is refusing to offer redundancy pay.
My friend has worked there for 4 years and very much wants / needs a reference but also wants not to be cheated out of her redundancy (if in fact she entitled to any).
Any thoughts please on the legal position and how best to proceed?
Legally they have to give at least statuary redundancy. https://www.gov.uk/staff-redundant/redundancy-payA friend is working for a ltd. co. business which the owner (sole practitioner effectively) has decided to close for their own personal reasons (it's not insolvent)
The owner (the sole Director) has given the person 1 month notice but is refusing to offer redundancy pay.
My friend has worked there for 4 years and very much wants / needs a reference but also wants not to be cheated out of her redundancy (if in fact she entitled to any).
Any thoughts please on the legal position and how best to proceed?
Long and short appears to be employment tribunal if they don't pay.
ACAS is usually a good place to go to read up on it and for your friend to advise the business owner about his obligations.
https://www.acas.org.uk/your-rights-during-redunda...
https://www.acas.org.uk/your-rights-during-redunda...
What does their contract say in terms of notice required?
How old are they?
They're entitled to 1.5 weeks pay for each full year of employment after their 41st birthday or 1 weeks pay for each full year of employment after their 22nd birthday. However, weekly pay is capped at £544 for the calculation.
If they've worked there 4 full years and they're 30's, the most they're entitled to is £2,176, if they're 50's, the most is £3,264 (both examples if earning the pay cap or above, the numbers would be smaller if they earnt less)
The reason I ask about the contract is that if there isn't any notice required or only 1 week, the difference between the 1 month pay offered and the legal requirement may not be as much as expected? Alternatively if it says 3 months notice then I'd be more inclined to argue it. Definitely worth sitting down to do the numbers before deciding on a best course of action as they may decide a small difference is worth taking to remove the hassle and help with a reference etc.
How old are they?
They're entitled to 1.5 weeks pay for each full year of employment after their 41st birthday or 1 weeks pay for each full year of employment after their 22nd birthday. However, weekly pay is capped at £544 for the calculation.
If they've worked there 4 full years and they're 30's, the most they're entitled to is £2,176, if they're 50's, the most is £3,264 (both examples if earning the pay cap or above, the numbers would be smaller if they earnt less)
The reason I ask about the contract is that if there isn't any notice required or only 1 week, the difference between the 1 month pay offered and the legal requirement may not be as much as expected? Alternatively if it says 3 months notice then I'd be more inclined to argue it. Definitely worth sitting down to do the numbers before deciding on a best course of action as they may decide a small difference is worth taking to remove the hassle and help with a reference etc.
They're 58 and their contract says 1 month notice. 'Notice of termination' has been given and runs to early Feb. They will work during that notice period.
They only work part time and earn roughly £250 per week.
Thanks for the advice re the risk/reward of arguing the case...
Looks like about £1500 redundancy which my friend will not want to miss out on so I think the plan may be to get a reference signed now and then argue the redundancy nearer the actual business closing date.
They only work part time and earn roughly £250 per week.
Thanks for the advice re the risk/reward of arguing the case...
Looks like about £1500 redundancy which my friend will not want to miss out on so I think the plan may be to get a reference signed now and then argue the redundancy nearer the actual business closing date.
Edited by Canon_Fodder on Monday 10th January 12:25
Edited by Canon_Fodder on Monday 10th January 12:26
If the owner is not directly paying redundancy then the companies finances cannot cover it (its a legal requirement when financially viable). Whether that situation has been manipulated to happen, or happened as a result of a poor trading period can be debatable.
If the business is insolvent then the government covers the cost of redundancy. Your friend will still get a redundancy payment but it will take months to come through, especially during covid times. - they should be prepared for days of being on the phone chasing it up with the relevant government department (The employer will not be doing it as they no longer exist).
As long as business covers its tax liabilities to HRMC at the point of closing, the "government" are satisfied if you will. Moneys going out are prioritised to
HRMC, suppliers, and staff at the end.
If the business is insolvent then the government covers the cost of redundancy. Your friend will still get a redundancy payment but it will take months to come through, especially during covid times. - they should be prepared for days of being on the phone chasing it up with the relevant government department (The employer will not be doing it as they no longer exist).
As long as business covers its tax liabilities to HRMC at the point of closing, the "government" are satisfied if you will. Moneys going out are prioritised to
HRMC, suppliers, and staff at the end.
[quote=CArmo123]If the owner is not directly paying redundancy then the companies finances cannot cover it (its a legal requirement when financially viable). Whether that situation has been manipulated to happen, or happened as a result of a poor trading period can be debatable.
I/quote]
Thanks. I believe the company is profitable. The owner has simply decided to stop operating and refuses to pay redundancy.
I/quote]
Thanks. I believe the company is profitable. The owner has simply decided to stop operating and refuses to pay redundancy.
Canon_Fodder said:
I think the plan may be to get a reference signed now and then argue the redundancy nearer the actual business closing date.
For what it's worth, in the couple of decades I've been working I've never received (or asked for) a signed reference from a current or previous employer, or heard of anyone else doing this - prospective employers will want to contact previous employers to confirm that what you have told them about their work history and qualifications is true and correct. The days of "Canon_Fodder is a little lazy but if you keep him on his toes with a little watch-tapping when he's late back from lunch you will find him an adequate colleague" are long gone.If a prospective employee turned up with a signed letter purportedly from their previous employer I'm pretty sure it wouldn't pass many HR officers' checks, they would still want to contact the previous employer themselves. If the company no longer exists or is not contactable, as long as she can show some payslips and/or a P45 I'm sure it would be fine.
Most well run businesses these days won’t give a reference making any comment about the individual. Our policy was to confirm the dates the employee worked for the business and their job title.
As said by others, new employers are very unlikely to place any emphasis on a reference other than some sort of proof of employment meant and role.
As said by others, new employers are very unlikely to place any emphasis on a reference other than some sort of proof of employment meant and role.
JP Fox has given you the information you need above OP
As for references, it is only normal procedure to have a written reference upon leaving a company if it is an agreed reference wrapped up in a settlement agreement.
As this situation is one where the company will cease to exist then it would be sensible to gain such reference but as said above all it needs to be is as follows -
Mrs X worked for Acme Ltd from 1 Jan 1998 to 1 Feb 2022 in the position of administrative assistant
And that’s it
As for references, it is only normal procedure to have a written reference upon leaving a company if it is an agreed reference wrapped up in a settlement agreement.
As this situation is one where the company will cease to exist then it would be sensible to gain such reference but as said above all it needs to be is as follows -
Mrs X worked for Acme Ltd from 1 Jan 1998 to 1 Feb 2022 in the position of administrative assistant
And that’s it
meatballs said:
Just my 2 cente - What a dick, work with someone for 4 years, reap profits from business, begrudge them a couple of grand when you shut up shop and remove their income?
Yes indeed... Thanks to all who have replied.
Unfortunately it looks like the position will be that the owner refuses to pay redundancy and is closing the business and moving abroad.
In this situation is there any hope of my friend getting their redundancy?
A tribunal? (but the company is being dissolved...)
Govt? (but the company wasn't insolvent when closed...)
What your friend needs to do now is calculate how much they would be owed using the formula outlined above by JP Fox. Add into that any holiday owed and formally request that figure to be paid along with outstanding salary. Once they have done that if the employer refuses then you really need to get moving legally on this fast so I would suggest they give the acas hotline and citizens advice a call so that help can be arranged quickly. It is important that they do the calculation request step first though.
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