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They say they can't afford to pay me....


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Hello guys. I think I know some of the answers here, but would appreciate your input please.

 

A friend of ours works for a very small employer and has been there for over 10 years. Just before the end of July, he had a phone call from the employer to say that the business is in trouble and can't afford to pay him, so please don't come into work as of 1st August.

 

They only paid him until the end of July and didn't seem to think this was a problem. They said they would write with confirmation, but they haven't as yet.

 

Our friend is worried that the employer may not have paid across NI and tax that has been deducted according to the sporadic payslips he's had. I know this can be reported to HMRC.

 

He's digging out his contract and thinks it says he's on a month's notice. He's also owed 2 weeks' holiday.

 

I think they should pay him redundancy pay, PILON and holiday pay, am I right? And do you think it's letter before action time? Also, I think if the employer has problems he should be looking at the government body that can pay redundancy if someone's employer can't.

 

Please tell me what you think, guys. I will try to answer questions or get more information.

 

Thank you for any help you can offer, HB

Illegitimi non carborundum

 

 

 

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Definitely LBA time. If there is no laying off clause in the contract, then the employer should either negotiate that holiday is taken or reduced hours agreed. If this hasn't happened then your friend is currently having wages deducted unlawfully as 'don't come into work' does dot remove entitlement to be paid unless and until redundancy is confirmed, and then only after the appropriate notice.

 

Ten years service equates to a minimum of ten weeks notice, not a month, so in theory, your friend is looking at a claim for 10 weeks pay, plus 2 weeks holiday pay plus 10 years worth of redundancy (1 week's pay or £400 whichever is the lesser amount for each completed year under the age of 41 or 1.5 weeks pay or £600 whichever is the lesser for each year completed over the age of 41). Redundancy pay is paid tax free and all other payments are subject to normal deductions, however (and it may need to be pointed out) the 10 weeks notice pay can also be paid tax free if there is no PILON clause in the contract and the employee is not required to work the notice.

 

That's the theory, but as you say, the employer cannot pay anything at present, so this may indeed need to go to the National Insurance Fund, but be warned - this may take a while as the employer may firstly need to be declared insolvent.

Any advice given is done so on the assumption that recipients will also take professional advice where appropriate.

 

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