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purple mk2

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Jan 26, 2012
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For over 35 years I worked with my Father, in our family business. Unfortunately, he died a couple of years back and I took the business on with my two sisters as Partners. The Partnership was an equal one between myself and my sisters and it went well in the beginning, but they played no part in the day-to-day running of the business. I was, financially, a third of the partnership and was given a salary of £450.00 per week, approved by my Father before his death. However, my Sisters didn't like the financial arrangement, but that was agreed when he was alive.
My Sisters were each given a share of the business. Since then they have tried to overturn my Father's wishes, as they had no part in the day-to-day running of the firm. However, they started to
realise that my wages, agreed by my Father,were quite a lot more than the money from their income from the shares, and they demanded that I had a to take a pay cut. My case is that my wages were given to me by Father, and were my sole income, and they wanted me to take a pay cut. Am I correct in that they have no right to take my wages from me? Thank you.
 
The own 2 thirds of the company so are in control as far as I can see. Time to negotiate, as you are the one doing the work it sounds like you have a card to play in that if you stop working they get nothing.
 
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£23k to run a company is nothing, about £11 an hour, you get £8.50 for working on the checkout at Morrisons, £10 if you are a checkout supervisor.

It might have been a good salary years ago, now with Living Wage, its been eroded and looks a bit weak now. (just my view)
 
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Just to clarify, from your previous posts it appears that you and your sisters and possibly your mother are in partnership.

Do you have a written partnership agreement?

Do you have an accountant who prepares the annual partnership Accounts?

Presumably no PAYE is operated on your "salary" as it is merely a prior charge on the partnership profits?
 
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purple mk2 said:
.....However, they started to
realise that my wages, agreed by my Father,were quite a lot more than the money from their income from the shares, and they demanded that I had a to take a pay cut.
Click to expand...
Your sisters are making a very common mistake. They are conflating ownership/shareholding with working.

People who own a company benefit from that ownership. As equal partners (I assume that means 1/3 each) you can get a dividend/share of profits. This is no different than if you were to buy shares in British Gas. You don't have to work for British Gas, you just get dividends for owning the shares. HOWEVER... someone does work for British Gas and the work they do generates the resources/profit that allows British Gas to pay you your dividend. Without their work the company wouldn't exist and you wouldn't get a dividend. Those people need to be paid for their work and yes, they can buy shares in the company and get dividends AS WELL as getting a salary.

You are a shareholder/partner and you are (completely separately) and employee/Director. You get a share of the profits for being a shareholder and you should get a salary/benefits to compensate you for the work you do. You need to point this fact out to your sisters. You also need to point out that if you don't get paid for your work then you stop doing it and someone else will have to be hired to do it (and paid a wage which will almost certainly be more than you are currently paid).

Given what you have said not only should you not be taking a pay cut, you should in fact be getting a pay rise.
 
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Yes, I appreciate that, but they have enlisted the help of my Aunt, who thinks she is an accountant, to look at the position.
The position is that the two other Partners, ie. my Sisters, are saying that they want me to take a pay cut. My Father gave me that pay rise, to £450.00 per week, and, to my mind that was his wish. They are now demanding that I should have a drop in wages and they now claim that I should hand over some of my wages to them. They want me to hand over around £8000.00 of my hard-earned money. My Aunt is not a Partner in the business. Am I in order to tell them that I stand by my position?

Thanks for your collective inputs.
 
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This is something you definitely need legal advice on. It deals with more than just business matters; it deals with wills as well as business matters.

With regards to the business matters, is this a pure partnership or has a Ltd company been set up at some stage? When was the partnership/Ltd company set up? Was it after, or before your father died?
 
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What are the actual amounts that each of the partners get each year, and are they willing to help you with the day to day running of the business

Maybe putting the business on a limited company basis may be easier for everyone where the money will be pay and dividends, so they can see more clearly what there share is doing financially

Is there anything to stop you resigning from the partnership and starting your own business doing the same thing

I can understand the sisters view if they seem to have little or no advantage of owning their share

Falling back on what your father agreed is pointless its years ago and it's only you three who count
 
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purple mk2 said:
Yes, I appreciate that, but they have enlisted the help of my Aunt, who thinks she is an accountant, to look at the position.
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So? What position will she find?.... as per my last post you and your sisters own a share of the company. In addition to that you work for the company and they don't. So, they get money for their shares (and you should get exactly the same for your shares) and in addition you get paid for working. Tell them that if they want to earn more money they are welcome to come to work for the company and earn a salary.

My Father gave me that pay rise, to £450.00 per week, and, to my mind that was his wish........
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I'm sorry that your father is no longer with us but the fact is his wishes were just that... wishes. You can't go through life relying on what someone who is no longer involved wished. You are running a business and you need to make your sisters understand how businesses are run. Shareholders get X and workers get Y. If you are just a shareholder you just get X. If you are just a worker you get Y and if you are a shareholder AND a worker you get X+Y.

I echo what one of the above posters said. You need to get professional help. I would strongly recommend you talk to one of the forum members here.... The Resolver https://www.ukbusinessforums.co.uk/members/the-resolver.6183/
He specialises is mediating settlements of this sort.
 
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Thanks, everyone who took the time to post, but things have now come to a head. My Sisters have decided that they want to sell the business and the building from which we have traded since 1973, and their shares outweigh mine. I'm gutted, and my Dad would have been too. Suddenly, I'm out of work, but I thank everyone who has had an input.
Do I stand by my position that my Sisters have NO RIGHT TO TAKE £8000 of my hard-earned. Thank you and God Bless.
 
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From what it sounds like with very limited knowledge, but a one person business will be virtually impossible to sell if you don't assist the new owners

With no prior agreements there is nothing to stop you leaving the partnership and starting afresh in a separate building or home using your knowledge gained, or make them a offer for their parts of the company and just sell the building

Not sure of their ability to cut your wages you need professional assistance

what type of business is it, I assume you have a good reputation in the industry which will help if you need to go it alone
 
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Well that's an opportunity for you. Buy the business off them. You're in a strong position as the business without you may not be saleable.

If they just sell the building you get 1/3rd which you can use to start again. Not having to give 2/3rds of the profit away will give you a decent living and you get them off your back. You can't lose really.

But get proper advice. Quickly.
 
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It doesn't sound like a partnership at all. One of the fundamental principles of a partnership is that the partners should be in business together. It doesn't sound as though your sisters are working in the business at all.

You need to get legal advice as to the exact status of your business before you do anything else.
 
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What do the two sisters actually get each year for being silent partners, are there any benefits to them, If nothing you can understand there dismay, If it was say a limited company then they would expect to have a dividend every year at least

I think I understand what you have said that you and your father ran the business and both worked there, but after he dies he left each of you one third of the company and you are the only one who works there and draws a wage

In a partnership its ok for one person to be the solitary worker but any profit needs to be shared equally

I think you need to explain more fully the situation
 
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Chris Ashdown said:
What do the two sisters actually get each year for being silent partners, are there any benefits to them, If nothing you can understand there dismay, If it was say a limited company then they would expect to have a dividend every year at least

I think I understand what you have said that you and your father ran the business and both worked there, but after he dies he left each of you one third of the company and you are the only one who works there and draws a wage

In a partnership its ok for one person to be the solitary worker but any profit needs to be shared equally

I think you need to explain more fully the situation
Click to expand...


Limited company shareholders may want a dividend every year. Getting it is another matter.
 
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The details matter and to date you have drip fed details. We need to know on what basis the legal business is set up. Is it a partnership or a limited company?

Further you state that there is a building, is it owned or leased. If owned then who owns it? The company, partnership or the three of you as individuals? Was there a will? What does it say regarding the business and the building? Was there and executor, and if so what do they say? Has anyone got probate yet? Has the inheritance tax form been completed and sent off?

All these details matter and without knowing them it is difficult to properly answer anythong
 
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kulture said:
The details matter and to date you have drip fed details. We need to know on what basis the legal business is set up. Is it a partnership or a limited company?

Further you state that there is a building, is it owned or leased. If owned then who owns it? The company, partnership or the three of you as individuals? Was there a will? What does it say regarding the business and the building? Was there and executor, and if so what do they say? Has anyone got probate yet? Has the inheritance tax form been completed and sent off?

All these details matter and without knowing them it is difficult to properly answer anythong
Click to expand...
 
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The three Partners have equal shares in the business and the building. in addition I was given a wage of £450-00 week. However, the two other Partners, ie. my Sisters, now want me to take a
PAY CUT, AFTER the business has closed! This, surely, can't be right.
 
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purple mk2 said:
The three Partners have equal shares in the business and the building. in addition I was given a wage of £450-00 week. However, the two other Partners, ie. my Sisters, now want me to take a
PAY CUT, AFTER the business has closed! This, surely, can't be right.
Click to expand...

I would imagine its pretty common for people to take a pay cut after the business is closed. Doing less work perhaps?
 
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Firstly, they can't easily sell the business from under your feet, as you own one-third of it and of the building. Doing so would require court action and given that the business is your livelihood, they could easily lose such a case.

Secondly, the only people interested in memorial masons would be funeral directors and given the growing tendency to put people in the oven, I doubt they would be all too keen.

Thirdly, selling any business for a decent sum is nearly always a long, drawn-out process that can take several years, even with a buyer ready to jump in.

Fourthly, there really is no business. What you have is a building and a job that (TBH) does not pay very well. £11 p.h. is slightly less than I pay for casual unskilled labour from Europe as direct trouser money.

Fifth and last point, you have to start thinking about retiring and you do have some equity in the building I assume.
 
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purple mk2 said:
The three Partners have equal shares in the business and the building. in addition I was given a wage of £450-00 week. However, the two other Partners, ie. my Sisters, now want me to take a
PAY CUT, AFTER the business has closed! This, surely, can't be right.
Click to expand...

Makes no sense, how can you take a pay cut after the fact, and if its closed, theresno pay ?
 
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If the business has closed, it is ended. There is no salary to cut. You can choose to give your sisters however much money you personally want to give them. Or you can tell them that you will give them nothing.

Up to you
 
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