Can not afford to make employee redundant.

duster · #1 18-01-10, 12:51 PM

I own & manage a very small business (ltd co.) with just two employees on the payroll - myself & one other.
The business has been loosing money for the last twelve months & over the past six months I have used all our reserves to keep the company afloat in the hope that we could turn things around.
I am now at point where I must either make my colleague, who has worked with me for 10 years, redundant or let the company go into administration.
Redundancy is impossible as the company cannot afford to pay the statutory minimum & survive.
If the company were wound up then my colleague would be able to make a claim from the state.
The dilemma I have is that on my own I could continue to make a modest living from the company & would prefer to keep it from going into administration.
Any advice or suggestions would be much appreciated.

face2facehr · #2 18-01-10, 10:46 PM

Hi duster

You should go ahead and make your colleague redundant.

It doesn't matter that your company isn't in administration or declared insolvent; if you cannot afford to pay what your colleague is entitled to, he will still be able to claim for it from the National Insurance Fund.

You should make him redundant in the normal way, ensuring you follow correct procedure, and pay him as much of his entitlement as you can manage. He will then need to make a formal request in writing for the outstanding monies he is owed within six months, either to you or to an employment tribunal. Once he has done that, there is a form he will need to complete to claim his pay.

Hope that helps.