Bonus

[Jacob albert]

If a company is on the verge of insolvency and there is no prospect of it continuing due to lack of investment. Is it legal/proper to pay some staff contractual bonus payments which are due?

 

[JEREMY HAWKE]

Yes you have to pay their salary's These bonus are part of their pay package until you call in an IP .
If you cant manage that then you need to stop trading at 9 oclock

The banks lost 50 billion and still paid bonuses in 2008 !
Could not help it

 

[Mr D]

Yes you have to pay their salary's These bonus are part of their pay package until you call in an IP .
If you cant manage that then you need to stop trading at 9 oclock

The banks lost 50 billion and still paid bonuses in 2008 !
Could not help it

Probably because bonuses are not profit shares. Make a loss and unless its part of the conditions of the bonus then still payable.

 

[Lisa Thomas]

No it is illegal - take great care you are likely to be making illegal preferential payments if you pay bonuses to staff when the Company is insolvent.

depending on the circumstances it might be reasonable to pay a small amount of wage arrears (capped at £800 per employee) and holiday pay as these are preferential creditors however if the Company enters a formal insolvency procedure then most or all of this tab will be picked up by the government scheme - the Redundancy Payments Office.

A bonus will be an unsecured claim and therefore an illegal preference.

You should take advice from an IP.

 

[ethical PR]

If a company is on the verge of insolvency and there is no prospect of it continuing due to lack of investment. Is it legal/proper to pay some staff contractual bonus payments which are due?

Do not do this particularly if for yourself or one or your directors