Legal advice on a folding business/employee situation

[AnonymousBleep]

A good friend of mine works as a financial consultant for a small consultancy. The owner of the consultancy has been in financial trouble for a while, and hasn't paid their pension contributions for at least a year. He has now died suddenly, and it turns out he's been paying their salaries out of his own pocket. His partner is closing the business as it's not viable, but the dead owner has tied all the capital up (if there is any) and she has no access to it. She can't pay the staff salaries. My friend is on 3 months notice and has been told to keep working for this period and to claim statutory redundancy from the government (he's been there 20 years and is on a good salary so it should be £20K). I am sceptical about this, as a) will he definitely get that money and b) it seems madness to work another three months for free - particularly for a company that doesn't respect its staff enough to pay their pension contributions. My friend is planning on taking the partner to the small claims to get the pension contributions money.

It's a complete shitshow, but can anyone advise on whether my friend should work the three months as the partner says, and claim the money from the government, or just walk out now seeing as he won't get paid for it anyway? Thanks!

ETA - I told my friend to get out of there years ago and he didn't!

Going to small claims is simply throwing good money after bad - if there is no money, or other creditors, his claim won't be the priority. He needs to find out what "closing the business" means - are we talking about formal liquidation, or somebody just sits back and does nothing! I certainly wouldn't be working in these circumstances - I would be very clearly stating that until they are paid there will be no work taking place. Given this seems a bit unclear, it might be worth getting some legal advice. Technically if the employer can't pay redundancy then yes, the government scheme steps in, but this is a bit more complex than a normal business failure, and the detail will matter.

That's my concern - it's all well and good him working the three months for the statutory redundancy payment (capped at £21K) but he's a higher earner anyway and his pre tax income would be almost that for three months anyway. Plus he's already earned that 21K so would be working for free for another three months! That just seems to be taking the piss to me, particularly as he's working for a company that has effectively shafted him after 20 years of service. But he's worried if he walks away now he won't get that money, and he hasn't got tons of savings as he puts it all into his pension.

He is pretty unlikely to get that money anyway to be honest

He should call ACAS. It's basically a redundancy situation regardless of what the manager says. So it's notice plus redundancy money.
https://www.acas.org.uk/your-rights-during-redundancy

No, the compensation scheme will pay out for unpaid wages up to the time the business folds. No point at all continuing to work. If it's a limited company, then administrators need to be appointed and it;s they who will decide whether THEY want to continue employing the worker to earn income or wind down the company. The owner's "partner" may not even have authority to continue running the business - are they a director, if not, they've no authority at all. Your friend needs to be talking to an insolvency practitioner as a matter of urgency as they don't sound as if they know what they're doing. They may well be just as well to walk away, ignore the company, and let someone else, i.e. the bank appoint administrators to wind it up. They really need specialist advice.

OK next question - can anyone advise on who to contact for specialist advice?

Does this all depend on whether it is a partnership or limited company?

Sorry I misunderstood the OP - you don't work to get redundancy money anyway. If you work, that is for wages and redundancy is on top of it. @Mayflyoff makes a good point - I had assumed from the language that he is an employee - are you sure that is the case?

Presumably you can be an employee of a partnership, rather than a partner.

He should be advised by letter of the redundancy date. Liquidator should advise owner to write this letter to him. Then ideally payroll will be run to have him logged as bring due to he paid up to that date.
Liquidator then advised redundancy office if his dates of work, how much wages he is owed, and how much redundancy he is owed. He shouldn't work a day more. Liquidator will also advise of any old pension payments not made, ie not paid across to say nest, and this takes longer to action but will eventually get paid across to pension provider.

You can, but on thinking again the OP described him as a consultant. Since it mentions pension payments etc, I am assuming an employee, but it would help to be sure.

Don't encourage him to spend a penny before getting free advice from ACAS. He maybe able to resolve things for free. And if not will have advice on taking things forward.

Umm a possible issue... I am assuming that the partner referred to is the "live in with sex" kind of partner and not the business partner, since she cannot access the money? In which case, who is going to call in a liquidator? It would not be in her interests to do so unless she would financially benefit in some way (and that probably isn't the case if there is no money) because liquidators are expensive. Someone has to pay their bill. Creditors can call in liquidators - but again, who will do that given it costs them money and they are unlikley to ever see that money again. If liquidators aren't called in it will simply "sit there" until Companies House strike it off, which they will eventually do.

If that happens I think (and I am not sure about this) that complicates the claims to the RPS because the employer technically exists and there is no evidence that they haven't got the money to pay, and without that evidence the RPS will not be rushing to commit government funds.

As I suggested, I do think this is one for legal advice - it is potentially very complicated, and, given a death is involved could also bring in questions of frustration of contract etc etc. In all honesty I am not entirely sure we can provide meaningful advice given the variables possible here.

The OP needs to talk to an insolvency practitioner. But before they do that, they need to be clear about the facts, i.e. sole trader or limited company, etc.

If it's a limited company and they're not a director or shareholder, they really don't need to do anything, they can just let someone else sort it out, but they can't make any decisions etc themselves otherwise could become personally liable, i.e. if they tell the worker to carry on working!

He is an employee and it's a limited company.

The partner was in fact the deceased's life partner AND business partner, but really business partner in name only as she was never actively involved with the business.

But was she a director and/or shareholder if it was a limited company? The detail matter enormously. She has responsibilities if she was a director and would need to tread carefully. If she was neither, she can just forget it all and not take any actions at all - nothing to do with her!

His job title is consultant but he's an employee.

This I don't know. I'll pass this info on (I am passing it all on!)

You can get info about officers of the company from the Companies House website.

Look on companies house - are there any other directors listed?

Apparently the company was dissolved last May and he TUPEd all his employees to a different one.

It’s all sounding a bit fishy.

Did they TUPE across to another limited company?

I think so. And yes, it sounds VERY fishy. Maybe the stress of all this is what killed him.