The majority of people will likely tell you that directors cannot make the same claim as employees from the Insolvency Service for wage arrears and redundancy. This is a common misconception and is not true. Directors can be employees of a limited company much the same as any other employee.
With the right advice the majority of small business owners who work at their limited company full time will receive a full payment for their redundancy. Not only can this make a big difference to personal finances at a time of difficulty but can provide valuable funds to contribute to the cost of a Liquidation.
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For many Companies that have been trading for a long time or have a large number of staff, one of the biggest barriers to returning to profitability is the inability to downsize due to prohibitively large redundancy costs. This can lead to a Company continuing to trade whilst making losses just to service an excessive payroll. This is compounded by the fact that most business owners feel a sense of duty and responsibility towards their staff and do not want to leave them without a job or wages.
Fortunately, the Government takes a similar attitude towards the importance of paying staff their proper wages and redundancy pay. To this end, the Government Insolvency Service operates a redundancy payments service which deals with payments to redundant employees when a Company goes into formal insolvency.
What this means to you is that by restructuring your business through a formal insolvency procedure such as Liquidation or Administration you can lay off staff in the knowledge that they will still be paid in full but without you having to find the funds. Letting staff go can be a very difficult thing to do and often employees don’t react well but being able to reassure them that they will receive their full pay and redundancy can make a really big difference to how they take it.
When you get in touch with us, you will speak directly to a licensed Insolvency Practitioner from the outset. We will take the time to understand your Company’s financial position, what your future intentions are for the business and ultimately what outcome you are hoping for.
Making redundancies is rarely something we hoped to be faced with, but with the right support you can still get the best outcome for you and your staff. We will always work with you to help you achieve the best outcome you can in the most affordable way possible so please call us for further advice on 0800 084 3406