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.
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Eleanor Deem
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