Closing Down LTD With Employee(s)

[ThomserveBAS]

I'm probably taking liberties a bit here as this question is posted on behalf of my father in law, a self employed electrician of over 40 years.

Both my in-laws are retiring this year but my father in law has an employee (who's worked for him for almost 40 years).

The employee was offered the option of working a 3 day week or taking redundancy and he's gone for the latter but something struck me with this which makes me feel my father in law is not in full possession of all the facts.

There is no contract of employment between the employee and his employer so his redundancy pay would be statutory pay (which we've worked out on the government website to be just over 10k).

What I'm not happy with is that for months now, the employee has been paid a 5 day week when there has been at most 3 days of work for him to do - so the rest is paid for sitting around.

So - to get to the point (finally - sorry) - is my father in law obliged (remember: no contract of employment) to offer work where there is none and if the answer is no, I guess he is quite within his rights to force a reduction in working days to 3 as he originally proposed?

[BolshieBastard]

I'm probably taking liberties a bit here as this question is posted on behalf of my father in law, a self employed electrician of over 40 years.

Both my in-laws are retiring this year but my father in law has an employee (who's worked for him for almost 40 years).

The employee was offered the option of working a 3 day week or taking redundancy and he's gone for the latter but something struck me with this which makes me feel my father in law is not in full possession of all the facts.

There is no contract of employment between the employee and his employer so his redundancy pay would be statutory pay (which we've worked out on the government website to be just over 10k).

What I'm not happy with is that for months now, the employee has been paid a 5 day week when there has been at most 3 days of work for him to do - so the rest is paid for sitting around.

So - to get to the point (finally - sorry) - is my father in law obliged (remember: no contract of employment) to offer work where there is none and if the answer is no, I guess he is quite within his rights to force a reduction in working days to 3 as he originally proposed?

Well you may not like the idea that FiL's employee has been paid for working 5 days instead of 3 but, he probably feels some loyalty to the guy after 40 years.

Irrespective of how you 'feel,' you FiL may be happy to pay the guy more than the statutory entitlement and good on him if he does.

There may be no physical CoE but I suspect after near 40 years, there will be an 'implied' contract on both sides.

Are you afraid of missing out on some potential legacy or something!?

[ThomserveBAS]

Well you may not like the idea that FiL's employee has been paid for working 5 days instead of 3 but, he probably feels some loyalty to the guy after 40 years.

Irrespective of how you 'feel,' you FiL may be happy to pay the guy more than the statutory entitlement and good on him if he does.

There may be no physical CoE but I suspect after near 40 years, there will be an 'implied' contract on both sides.

Are you afraid of missing out on some potential legacy or something!?

It's less loyalty and more not having the full facts (and nothing to do with legacy - not sure why you felt the need to snipe on that point).

Yes the guy has worked for him for almost 40 years, but he needs to know whether he can be held over a barrel so to speak by having to pay when there's no work (where do you think that money comes from?!) or whether he could reduce the number of working days to keep the business going (in a lesser capacity) for a little longer.

EDIT: and to clarify - the "taking liberties" comment was me taking liberties with you lot - i.e. this isn't strictly a question for this site, but as he's running a business and is a limited company I thought I'd ask here on the off-chance somebody knew the answer.

[BolshieBastard]

It's less loyalty and more not having the full facts (and nothing to do with legacy - not sure why you felt the need to snipe on that point).

Yes the guy has worked for him for almost 40 years, but he needs to know whether he can be held over a barrel so to speak by having to pay when there's no work (where do you think that money comes from?!) or whether he could reduce the number of working days to keep the business going (in a lesser capacity) for a little longer.

EDIT: and to clarify - the "taking liberties" comment was me taking liberties with you lot - i.e. this isn't strictly a question for this site, but as he's running a business and is a limited company I thought I'd ask here on the off-chance somebody knew the answer.

I think you need to look at the language you are using, held over a barrel? Your FiL 'offerred' the employee two options, 3 day week or redundancy. Guess what? He made a selction, one you seem to think he's taking the piss over.

After 40 years, I'd suggest your FiL has more than a sense of loyalty. Maybe a question of doing the right thing or, friendship which seem to be the last thing on your mind.

You talk about your FiL not being in possession of the full facts. I think you're trying to square your contractor circle here to fit a totally different situation.

[Zippy]

If the guy has been working for your FIL for 40 years then there is a contact of employment - it's just not written down. If he has been paid for a five day week for months it's not a zero hours contract either, so I reckon your FIL will have to pay up.

I have to say 10k for 40 years seems very little - are you sure that is correct?

[stek]

Closing Down LTD With Employee(s)

Can't be Ltd AND self employed...

[Clare@InTouch]

There are rights implied by law even if there is no written contract in place.

have a read through here Citizens Advice - Contracts of employment

There is always a contract between an employee and employer. You may not have anything in writing, but a contract will still exist. This is because your agreement to work for your employer and your employer’s agreement to pay you for your work forms a contract.

The rights that you have under your contract of employment are in addition to the rights you have under law, such as, for example, the right to a national minimum wage and the right to paid holidays.

For more details about what rights an employee has by law, see Basic rights at work (link below)

and here Citizens Advice - Basic rights at work

- the right to claim redundancy pay if made redundant. In most cases you will have to have worked for two years to be able to claim redundancy pay

[SueEllen]

I'm probably taking liberties a bit here as this question is posted on behalf of my father in law, a self employed electrician of over 40 years.

Both my in-laws are retiring this year but my father in law has an employee (who's worked for him for almost 40 years).

The employee was offered the option of working a 3 day week or taking redundancy and he's gone for the latter but something struck me with this which makes me feel my father in law is not in full possession of all the facts.

There is no contract of employment between the employee and his employer so his redundancy pay would be statutory pay (which we've worked out on the government website to be just over 10k).

What I'm not happy with is that for months now, the employee has been paid a 5 day week when there has been at most 3 days of work for him to do - so the rest is paid for sitting around

Contracts of employment don't have to be written down as the others have said.

As the guy has worked for the FIL for 40 years for a 5 day week if you force this guy to work 3 days a week instead of allowing him redundancy he can take you to a tribunal and sue you.

The average cost for your FIL to defend this would be around 5K in solicitors fees plus stress and the compensation.

The employee can also sue you if the redundancy is done incorrectly.

I would suggest as nothing is written down and to avoid someone in the employee's family suggesting that the employee sue your FIL, your FIL consults an employment solicitor to check he is doing the redundancy correctly. As if your FIL is self-employed and not in a limited company structure, which some tradesmen are, he would be personally liable.

[ThomserveBAS]

I have to say 10k for 40 years seems very little - are you sure that is correct?

The figures come from the gov.uk website - the actual figure is 10260 but having read the footnotes it says "length of service is capped at 20 years" so he needs to find out how to calculate the 20-39 year gap.

Can't be Ltd AND self employed...

What I was trying to say is that he runs a limited company by himself - so isn't a contractor in the sense most of us are. Sorry if that was confusing.

There are rights implied by law even if there is no written contract in place.

have a read through here Citizens Advice - Contracts of employment

There is always a contract between an employee and employer. You may not have anything in writing, but a contract will still exist. This is because your agreement to work for your employer and your employer’s agreement to pay you for your work forms a contract.

The rights that you have under your contract of employment are in addition to the rights you have under law, such as, for example, the right to a national minimum wage and the right to paid holidays.

For more details about what rights an employee has by law, see Basic rights at work (link below)

and here Citizens Advice - Basic rights at work

- the right to claim redundancy pay if made redundant. In most cases you will have to have worked for two years to be able to claim redundancy pay

Thanks

Contracts of employment don't have to be written down as the others have said.

As the guy has worked for the FIL for 40 years for a 5 day week if you force this guy to work 3 days a week instead of allowing him redundancy he can take you to a tribunal and sue you.

The average cost for your FIL to defend this would be around 5K in solicitors fees plus stress and the compensation.

The employee can also sue you if the redundancy is done incorrectly.

I would suggest as nothing is written down and to avoid someone in the employee's family suggesting that the employee sue your FIL, your FIL consults an employment solicitor to check he is doing the redundancy correctly. As if your FIL is self-employed and not in a limited company structure, which some tradesmen are, he would be personally liable.

Thanks.

I clearly gave a couple of false impressions in this thread and apologise for that - I just wanted to check for him (he knows we're having this discussion) as he can be a little naive when it comes to making decisions like this so I didn't want him to do something if there were other options.

He has had advice from somebody (some business-type body) but he's still confused which is why I started doing some digging for him.

[BlasterBates]

I don´t think it would cost very much to check with an accountant. Might be worth doing to avoid any potential dispute.