Because the social insurance scheme will pay the employees their dues but not the suppliers so this way everyone gets paid.
I suspect you're right, and I asked the question to get confirmation of this.
This is socialisation of private sector losses. Statutory redundancy is a liability of the business. It seems as if the closure of the business is being engineered to ensure that this liability is handed over to the State, just as banking losses were handed over to the State. I suspect that the State is getting a little tired of paying the losses of private businesses.
I'd say it's a pretty safe bet that it's only statutory redundancy the guy is talking about, given the circumstances.
I'd say you're right, but I asked the question just to be sure, as it would completely change the answer if he was talking about payments over statutory.
Re: the emboldened bit, until the day that he decides to call a creditors meeting to cease trading and wind up the company, the OP has the obligation to pay his suppliers for his purchases, and his employees for their work. Your post implies that somehow an employer should have a reserve of cash set aside somewhere to pay staff statutory redundancy in the event of the business going under, which is pretty nonsensical from a real world commercial perspective - since any company with enough cash to set aside for that isn't going under. He only incurs the liability to the redundancy when the lads cease to be employed, which is when he makes the decision to wind up. Until that date he should continue to pay his creditors in the normal way, just as he should the employees' wages, and the fiduciary taxes.
I'm no legal expert, but I understood that one of the major concerns of receivers or liquidators that can end up in recommendations for restricting directors was where directors were seen to favour one debtor or class of debtors over others.
The point about the timing of the liability is, from a business point of view and an ethical point of view, a moot point. The owner knows this liability exists and is coming down the line, as evidenced by the posting here in the first place. Any pretence otherwise is just that - pretence.
And you might clarify how you've decided from what the OP said that he has "worked out that it's OK to pay suppliers their full debts but not employees?" - as I don't infer that from his posts...
I inferred that from the following statements in his post;
Hi,
I have run my own business for the past 10yrs with 4 other staff members. They have been on a 3 day week on and off for the past 3 years, more on than off to be honest. I am reaching retirement age later this year and have been keeping the business going on my savings for the last 3 years. The business has no money to pay out redundancy potential 60K. All their tax contributions are paid up todate.
I want the lads to get their payouts but I dont know how to go about it. Do I close the business, liquidate it, strike it off? I want to retire not owing any money and will make sure suppliers etc are all clear. Do I tell the lads my plan and give them a years notice?
Any advise offered would be greatly appreciated as I am just prolonging the inevitable at this stage.
Hi,
The business has no money to pay out redundancy potential 60K.
I want the lads to get their payouts but I dont know how to go about it. Do I close the business, liquidate it, strike it off?
I want to retire not owing any money and will make sure suppliers etc are all clear.
There is a clear intention to continue to pay money to suppliers and not provide for redundancy for employees. Indeed, there is an expectation that someone else (the State) will step up to pay redundancy for the employees.
he simply says that he won't have enough money to pay everyone everything.
Not true - he explicitly states his intention to pay off suppliers but not provide for his liability to employees.
I think the OP is in a horrible situation, is ASKING how best to deal with it fairly (you'll note his primary concern in starting the thread is for his employees) and the tone of your comment is very patronising.
Yes, I agree that he's in a horrible situation, and I recognise that he's worked hard to provide employment in difficult circumstances, and that he is funding the business out of his own pocket.
But none of that entitles him to put suppliers before his liability to employees.
My comment wasn't meant to be patronising, and I apologise if it came across that way. It was meant to be challenging, and I don't apologise for challenging the assumption that the State should pay the statutory redundancy that he owes his employees.