Completely devistated

carolme

Free Member
Aug 10, 2011
60
4
About a year and a half ago I moved to the UK from America to be with my husband and help him run his small business. He has carried his company on his back for the past 5 years and provided stable employment for 8-10 staff members. Shortly after I joined him in the business we had a member of staff who developed a mild medical condition. It wasn't much at first and was described by the employee as just being a slight irritation and wasn't really effecting his job at all. The condition was however getting worse and it got to the point where he told us that he was going to need surgery. He came to our management with a fit note that he had received from his GP saying that he was unfit for any kind of work but he told us about the surgery and he said that with the surgery and time to recover he would be back to work in about 6 weeks. During this time he was claiming sick pay through the company and about 3 weeks from the time he left my husband sent him an email asking how he was doing and when he was thinking of returning to work.

We never received a reply to the email however about a week after the email was sent we received our first tribunal notice for disability discrimination and unfair dismissal. As you can probably imagine we were shocked to receive this and we responded by saying that he had not been dismissed and that he was still getting the sick pay through the business. That letter was followed by a letter of resignation from the employee and another tribunal case keeping to the disability discrimination and constructive dismissal. We replied to his resignation letter asking him to reconsider and that we had kept his job open for him but he declined. 4 times we offered him his job back and all 4 times declined.

We received the hearing packet sometime after that and realised that the evidence that he was using was an email conversation between my husband and our office manager talking about staff reviews. I will admit that he wasn't the best member of staff that we had but that was totally unrelated to his condition and we hadn't intended on dismissing him at any point. He obtained these emails by hacking into our system and was found guilty of such but since this was his first offense he was only given a warning on his record.

We had the hearing in July of last year. We are a small struggling company and both my husband and I have been trying to do anything and everything to keep the company going- we haven't even taken salaries or dividends and kept the money in the company to support the staff. We didn't and don't have the money for legal support so we took it on ourselves. The hearing was a complete nightmare with the other side providing different statements than the ones that we had been provided with and not including our evidence in the packets- it actually wasted a half of a day just to sort their things out. I truly believe this was a planned effort to try and cause us stress so we loose focus on our case. It was also said that the email that my husband had sent in December was never received even though we had a copy and that same email address was used all the time in the past.

We received the determination 6 weeks later and it was ruled that we shouldn't have listened to the doctors fit note and should have offered him a different position that had come open in the company while he had been off sick.

At this point we felt that the court was wrong and that we did have an obligation to follow a doctors orders so we contacted our liability insurance provider. She couldn't believe everything that we had been through and contracted Brit Insurance who wrote a letter stating that we do have obligation to follow a doctors orders and based on his condition we would have been in breach of our liability insurance if we so much as allowed him onto the premises. We then submitted a request for a review and attended a review hearing where they determined that the letter was considered new evidence and since that evidence could have been obtained at the first hearing our request for a review was denied.

We are now faced with a remedy hearing where they are claiming £39,000. This will obviously bankrupt the company and all of our staff will be out of work and all of our hard work will be for nothing. We have applied for an appeal but not sure if we will be granted that or not.

At this point we are hopelessly trying to do everything we can think of to try and save anything. The saddest part is that there really isn't anything in the company so the other side will have to force us into liquidation but will end up getting nothing because there isn't anything to get out of the company and all of the staff will loose their jobs for nothing! I just don't see the justice...

Any advice or help would be so appreciated!
 
I have sympathy but I don't think a public forum is the place to discuss the facts of the case in detail. Have you taken any legal advice at all even from a free advice line provided by your insurance company?
 
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Is it a limited company? If so why are you worried? If there is no stock/equipment then you have nothing to worry about.

Shut it down and re-open? Im sure there will be a way of doing it and avoiding any tribunal following you but someone much smarter than me would need to step in for that.

Im not sure how you could possibly lose this case. He has evidence which was illegaly obtained, you followed the sick note to the letter... without wanting to go against your post, are you sure there isnt something missing?

Also shouldnt your liability insurers be paying out the £39k anyway so you have nothing to worry about.
 
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How I feel for you, all that hard work for what>

Can you start again as a new company and with restructuring and only the best of employees and make money, or use these strange Pre Packaged deals to raise from the old company which sound's like it's dead

I understand your frustrations but it must be better to walk away from the old with this burden of debt and start again with a clean sheet and equipment and personnel from the old company who you really need to keep continuity with your customers

Karl is the expert on the forum on Tribunals but you must not waste to much effort fighting a war you may not be able to win

Good Luck
 
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Since we haven't been able to afford legal advice we have doing as much research ourselves as we can. I am concerned about the TUPE laws and it if it is possible to follow us. I would love to keep the company going if we can but we are scared that what ever we do they will come after us and if do anything wrong they will get us personally- we are limited but still have to be careful with things.

Seriously- there is really nothing missing- this country gives no protection to employers and employment tribunals are the only court that will allow illegally obtained evidence! The judges really didn't care where or how he got the evidence :(
 
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surely if you close a business and re open under a new company, TUPE doesn't come into it, as the new business isn't taking over the old one from a legal stand point
 
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Since we haven't been able to afford legal advice we have doing as much research ourselves as we can. I am concerned about the TUPE laws and it if it is possible to follow us. I would love to keep the company going if we can but we are scared that what ever we do they will come after us and if do anything wrong they will get us personally- we are limited but still have to be careful with things.

Seriously- there is really nothing missing- this country gives no protection to employers and employment tribunals are the only court that will allow illegally obtained evidence! The judges really didn't care where or how he got the evidence :(
I do sympathise with you, and wish you luck.

But can I ask a question?...

In hindsight do you think if you had legal representation the out come would have been different?
 
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I have sympathy but I don't think a public forum is the place to discuss the facts of the case in detail. Have you taken any legal advice at all even from a free advice line provided by your insurance company?

This.

Contact a lawyer then ask a Mod or Admin nicely to delete this thread as it will jeopardise your defence.
 
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We looked at getting legal help but the problem is that it was going to cost us over £8,000 and we simply can't afford it! Even spending that money wouldn't guarantee that we win so we would be looking at going bankrupt just because of the legal fees.

We have talked to so many people and they just can't believe what has happened- I really think a public forum is the place to put this- people need to know! If we go under I will tell everyone I can to prevent people from starting a company unaware of what can happen to them! There have been so many people we have talked to that have had really bad experiences and yes there are also people who have been unfairly treated by their employers but people really need to look at the bigger picture here! Because of 1 member of staff that wants to make some money- a company that has great possibilities closes and there are 9 people out of work! If a company unfairly dismisses a few staff- that is just 2 staff out of work. If the companies are protected there will be more jobs on the market- and in the long run it is better for the economy and better for those individual people.
 
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We looked at getting legal help but the problem is that it was going to cost us over £8,000 and we simply can't afford it! Even spending that money wouldn't guarantee that we win so we would be looking at going bankrupt just because of the legal fees.
That wasn't what I asked..
We have talked to so many people and they just can't believe what has happened- I really think a public forum is the place to put this- people need to know! If we go under I will tell everyone I can to prevent people from starting a company unaware of what can happen to them! There have been so many people we have talked to that have had really bad experiences and yes there are also people who have been unfairly treated by their employers but people really need to look at the bigger picture here! Because of 1 member of staff that wants to make some money- a company that has great possibilities closes and there are 9 people out of work! If a company unfairly dismisses a few staff- that is just 2 staff out of work. If the companies are protected there will be more jobs on the market- and in the long run it is better for the economy and better for those individual people.
and that isn't why people are suggesting you remove it, but if this goes further and your suggesting it will, this post could hamper your case
 
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Seriously- what else can they do to us?? They have already basically won- don't think we have much chance at getting an appeal by the sounds of things and the only thing left is for the courts to decide how much they win!

As far as I can see there is really no hope for the company because with the protection of TUPE laws any new business we try to open they can come after- we couldn't keep any of the staff because it would be tracked- we couldn't have any of the same clients- we couldn't even use any of the same furniture...
 
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how would the staff be tracked, one companies closes and they start at another company, how does TUPE come into it? TUPE is when a company gets taken over.

Personally I think you need to go out tonight and forget about everything, do something relaxing and don't think about the company, then come back in the morning hopefully with a fresh mind.
 
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Carolme

If you take the sentiment out of the company you have helped run , is there any reason to continue with the company that cannot be bettered by a clean break.

Don't forget you must stop trading as soon as you know your are insolvent that is a legal responsibility, I am sure someone on here will give you the facts on how to close down without paying out more money

Its easy for us to say but we also have no knowledge of your company and what equipment of skills you would need to start up again, so can only make suggestions that may be pointless in your case
 
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It is all down to the staff

Carolme

If you take the sentiment out of the company you have helped run , is there any reason to continue with the company that cannot be bettered by a clean break.

The bottom line here is the staff- if I have to let all of the current staff go and look at opening a new company with all new staff I simply won't do it! The reason I am fighting to hard to keep the company going is for the few loyal staff members that we have- without them I would not think twice about closing the company and finding a job for myself (ourselves) where we actually can earn a living!

Don't forget you must stop trading as soon as you know your are insolvent that is a legal responsibility, I am sure someone on here will give you the facts on how to close down without paying out more money

We aren't running insolvent- we have no debts at the moment except for the personal money we have put into things! They will have to put us through insolvency if they want to try and get anything out of the company- but they will just end up with nothing because there isn't anything!

Its easy for us to say but we also have no knowledge of your company and what equipment of skills you would need to start up again, so can only make suggestions that may be pointless in your case
 
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No tupe is involved.
The company closes - its not being bought, its not being taken over, ts not merging...it would no longer exist.
You then start a new company, you can employ who you like. You know the staff, you know whos good and who isnt.

The only issue as far as im aware is the clientbank and any material posessions - to me the staff is the easiest bit. But as i have said im not a professional, someone will know more than me.
 
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Seriously- what else can they do to us?? They have already basically won- don't think we have much chance at getting an appeal by the sounds of things and the only thing left is for the courts to decide how much they win!

As far as I can see there is really no hope for the company because with the protection of TUPE laws any new business we try to open they can come after- we couldn't keep any of the staff because it would be tracked- we couldn't have any of the same clients- we couldn't even use any of the same furniture...

Have you thought of writting to David Cameron or your local MP.

Maybe one of them may have a glimmer of common sense.

Putting several people out of work for the sake of one person greed would not make sense to a 5 year old.

Earl
 
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We never received a reply to the email however about a week after the email was sent we received our first tribunal notice for disability discrimination and unfair dismissal. As you can probably imagine we were shocked to receive this and we responded by saying that he had not been dismissed and that he was still getting the sick pay through the business. That letter was followed by a letter of resignation from the employee and another tribunal case keeping to the disability discrimination and constructive dismissal.

Did you not point out the timeline of this?:


  • Sickness pay being paid with a financial record in place
  • Tribunal for unfair dismissal
  • Sickness pay still being paid with a financial record in place
  • Resignation received
  • New Tribunal
 
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it is obvious to anyone and everyone that we talk to- even the people that we have brought to court with us- that he just wants to get money out of the company. We pointed out when things took place and how everthing happened but the judges simply don't care! The claiment is provided with legal help at no win no fee- we have nothing provided and no protection! To employ staff in this country you have to be an expert of everything from medical conditions to employment law- the only problem with this is if you really understood all of these things you would never employ staff!

I really think that small businesses need to come together and fight against these laws. I agree that employees need some protection but what good are all the laws if there are no jobs to be had? The government just ends up paying more out in benefits to support thses people!
 
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We have talked to them and they have really given us little hope to be honest! The problem is that we were paying for HR adivce- a monthly retainer even! When things started happening he didn't support the advice he had given us and was charging us more for any work he would have to do extra! Not to mention he didn't have any insurrance in case we lost- and he wasn't a solicitor...

I think they offer a good service however we are to the point where they really can't help us and if we do go bankrupt there won't be a company to suport anymore!
 
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We are also now members of the FSB- but still really no help for now and no advice to how we can get a company going again without the TUPE law coming into effect!
 
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Not to mention he didn't have any insurrance in case we lost- and he wasn't a solicitor...

Why wouldn't you check this out before you employed him?

When things started happening he didn't support the advice he had given us and was charging us more for any work he would have to do extra!

Do you have his advice in writing, i.e. by letter, email, memo or somesuch? Can you not register a claim directly against your HR company?
 
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I would love to keep the company going if we can but we are scared that what ever we do they will come after us and if do anything wrong they will get us personally- we are limited but still have to be careful with things.
Let me be blunt here, as like many small business owners, it is easy to get confused. A limited company is a SEPARATE LEGAL ENTITY to yourselves as directors. This is why it is called a body corporate - it is as if it had a living body itself. This is why everything you do is in the name of the company, not yourselves.

There are certain circumstances where directors are personally liable, but these are normally for serious or fatal consequences where neglect plays a part.

So, unless you are involved in unlawful activities, there is no way that 'they will come after us' as you say.

Here is my take on matters as you have described in your first post:
The ex-employee has used nefarious actions to win a case against your company and thereby gain a significant amount of money. He has also used the might of an Employment Tribunal that does not operate according the the normal rules of evidence which has made an inequitable decision that has effectively bankrupted the company.
So, the first question is whether you are going to acquiesce and allow the ex-employee to obtain his ill-gotten gains. One thing is certain, if the company continues (with the directors' financial support) to trade itself out of this financial problem, the ex-employee will get every penny of the award.

To me it is a no-brainer. The company should cease trading on the basis that this £39K hit has made the company unviable as a going concern. If you agree with me, how you do this is something you need to give serious thought.

Is the existing company name one that you wish to use to trade in the future? If so:

  1. Set up a new company today of any name at all, even buy one off the shelf from a formation agent (I understand that they can even provide one with ready made banking facilities if you wish this).
  2. Change the name of your existing company to anything other than what it is now - even something as small as changing it from A Company Limited to A Company (UK) Limited.
  3. As soon as the existing company's change of name has been registered at Companies House, change the name of the newly set up company to that of the former. (A director I know of changed the names of two companies to: Out With The Old No1 Ltd and Out With The Old No2 Limited and then folded them. New companies were then set up using the old names.)
  4. Fold existing company as it is not in a position to continue trading.
  5. New Company offers to take on those employees made redundant by the old company.
  6. Job done.
Because of the HUGE FINANCIAL RISKS of being an employer, and also because the main company (through our hard work) has accrued a decent asset base, we took the decision some years ago to have a separate company called A Company (Employment) Limited. This company took over all the employee rights under TUPE as the new employer and it pays all the employees. It then bills A Company Limited each month for "Employment Services". Even though we treat all our workers with respect, should the worst happen and we ever lose a ET case, as this second company has no assets it will simply cease to trade and a new company will be set up. It does cost us extra though - accountants fees etc amounting to about £1,000 a year. It gives us great peace of mind though knowing that our assets are protected.
 
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My husband didn't know all of the details and hired this guy because he didn't know any better!

We probably won't try and go after him- just so tired of going to court and want to be able to live again!
 
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We have talked to them and they have really given us little hope to be honest! The problem is that we were paying for HR adivce- a monthly retainer even! When things started happening he didn't support the advice he had given us and was charging us more for any work he would have to do extra! Not to mention he didn't have any insurrance in case we lost- and he wasn't a solicitor...

I became Chairman of Governors of a C of E Primary School and one teacher really abused the system and managed to get almost 3 years of sick pay due to 'stress'. The Local Authority HR department (that we paid a subscription for, but they would only ever give verbal advice) was so namby-pamby and pussy-footed that they allowed this teacher to run rings around the 'return to work' and other policies.

I spent a whole day at a large library and studied regulations and case law. I then presented an eight page dossier to the governors disciplinary committee on how to get rid. As soon as she got wind that she was going to be dismissed, she resigned.

I have wrote the above to demonstrate that almost all External HR advice is hardly ever worth the money spent, as you have sadly found out: as soon as an awkward case comes about they all go to ground and you are on your own.
 
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Thanks David for all of that information! That is basically what we have done- except for the name changing thing! The old company has no assets but it holds the employees and contracts them out to the new company which has the assets and the customer base! The only thing is that I am worried that they will be able to connect the two at some point? Do you know of anyone who has done this and been successful? We have asked everyone from accountants to solicitors and no one is able to tell us if we are going to be protected!

Again- thank you so much for the time you put into your reply :-)
 
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Forget what i was going to post. It's just been covered :)
 
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Really nice post David A. Would I be right in thinking that transferring any business assets (machines, IT hardware, etc) would be difficult while performing your 6-point switch? The new company would have to buy them from the old one and I would imagine buying them for 1 pound would raise a few eyebrows?
 
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The old company has no assets but it holds the employees and contracts them out to the new company which has the assets and the customer base! The only thing is that I am worried that they will be able to connect the two at some point?
Not sure who the people you refer to 'they' are.

It really lights my taper when I hear of companies doing a phoenix. It seems so easy to do, and hard for the authorities to regulate against - mostly because of the basic concept of 'limited' and being a body corporate. My wife worked for a husband and wife team who were co-directors of successive similarly named companies. She worked in the admin office and in the six months before it folded the directors were taking £30K out as salary each month, even though the company was on the limit of its overdraft, on stop with the major suppliers so the staff were ordered to open accounts with smaller suppliers (Using the reason that being an SME, they wanted to deal with other SME's rather than multinationals - and when they did fold, the other SME's really felt the pain). The liquidators thought their actions were such that they'd be disqualified - but nothing happened. A year later they bought out a smaller operator, then took over two-thirds of the previous depots from the administrators then after ensuring that they had accounts with the major suppliers then changed the name back to almost the same as that which was phoenixed.
We have asked everyone from accountants to solicitors and no one is able to tell us if we are going to be protected!
Sounds true to form. Same is said of bankers, who will only lend an umbrella when the sun shines.

The only 'connection' between the two companies is that the same directors are in control. They remain two distinct legal entities. It's the same as us with a third company we run. The first deals with real estate and contracts with the second company to provide employees. The third is involved in finance and loans, and is mostly my baby. Nevertheless, all three have both have my wife and I as co-directors, and despite this all three companies are legally separate.

Look around at larger private companies and you will see connected companies that are either subsidiaries or co-controlled by the same directors. Bourne Leisure Ltd for example. They are a holiday form that operate Haven and Butlins. If you go onto Companies House you will see that there is Butlins Ltd, Butlins Skyline Ltd, etc. They also have other 'connected' companies such as a cleaning company that employs people to service the chalets.

The concept of company autonomy is so very strong, you have little to worry about - though with running any business there is always risk.

Think of a tall ship looking majestic in harbour. Then, it being on the high seas being tossed about by storm force winds while making its way across the ocean. The ship when in harbour was both majestic and safe, but that wasn't what it was designed for. Running a business is like being on the high seas - it always has a risk of being flooding in a storm, but has to sail the ocean to achieve its goal. If you are not prepared to go to sea, don't be in business.
 
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Really nice post David A. Would I be right in thinking that transferring any business assets (machines, IT hardware, etc) would be difficult while performing your 6-point switch? The new company would have to buy them from the old one and I would imagine buying them for 1 pound would raise a few eyebrows?

Correct.

The directors of Old Company Ltd have a fiduciary duty to maximise the value of any sale of remaining assets. But whether the eyebrow raising leads to more formal action is a moot point.

Most phoenixers don't even bother with this duty though, as they are aware that the Insolvency Service and others are too stretched to pursue matters unless it involves millions. Legislation is already in place, and with teeth too - but when you look at the abysmally small number of director disqualifications, it is obvious that many 'crooks' are being allowed to get away with repeated scamming of consumers and other businesses.
 
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The old switcheroo? Where they have two Ltd companies, one operates as holder in reserve, when Company A folds and takes all the debts with it Company B rides in on horseback and buys up all the old equipment and stock at the auction for a bargain price. Tickety boo.

It removes virtually all risks from what I can see. Perfectly legal, even if hundreds of people lose their jobs because the company becomes insolvent and is closed. They pay their taxes, they wind the company up voluntarily and then Company B picks up the good bits at the end of the bonfire and returns with stock, equipment and warehousing.

Perfectly legal. Companies do it all day long, I've seen one do it just this week in fact. Auctioneers selling all the lots from the old business and guess who's at the auction? Oh, hello there, fancy seeing you lot here, former Directors of Company A buying everything cheaper than what you paid when you ran the other business, but wait, you didn't even pay for that either because it was all on credit. Genius!
 
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Thanks for the advice- thank you more just for the encouragement! My husband and I have tried to do everything we could think of to keep things going without any help and basically you are right about any HR people- they really haven't been helpful at all! We have had the new company for over a year now and everything was bought across at market value! We thought it was all done for nothing when we talked to the FSB and they talked to us about the TUPE law.

We both knew there are risks with running a business and especially with employing staff but we had no idea that people would have the ability to do something like this to us! We treat our staff fairly and try and do our best for each of them. I am not sure after all of this that I would do it all again but I am commited for the long hall at this point. Even though one member of staff has done this to us I still feel obligated to give it my best for the employees who really do work hard.

Do you have anyone to cover in case you get a tribunal case? The FSB haven't been very helpful at all up to this point however I do know that if we have something like this happen again they have insurrance that might cover... I do have my reservations about this though as I know most insurrance companies try to get out of paying any way that they can- don't know just guessing!

Seriously- thank you so much- you don't know how much the encouragement means to both my husband and I at this point! It has really been a rough year since this whole thing started and at least we know that we have done everything we can!



Let me be blunt here, as like many small business owners, it is easy to get confused. A limited company is a SEPARATE LEGAL ENTITY to yourselves as directors. This is why it is called a body corporate - it is as if it had a living body itself. This is why everything you do is in the name of the company, not yourselves.

There are certain circumstances where directors are personally liable, but these are normally for serious or fatal consequences where neglect plays a part.

So, unless you are involved in unlawful activities, there is no way that 'they will come after us' as you say.

Here is my take on matters as you have described in your first post:
The ex-employee has used nefarious actions to win a case against your company and thereby gain a significant amount of money. He has also used the might of an Employment Tribunal that does not operate according the the normal rules of evidence which has made an inequitable decision that has effectively bankrupted the company.
So, the first question is whether you are going to acquiesce and allow the ex-employee to obtain his ill-gotten gains. One thing is certain, if the company continues (with the directors' financial support) to trade itself out of this financial problem, the ex-employee will get every penny of the award.

To me it is a no-brainer. The company should cease trading on the basis that this £39K hit has made the company unviable as a going concern. If you agree with me, how you do this is something you need to give serious thought.

Is the existing company name one that you wish to use to trade in the future? If so:

  1. Set up a new company today of any name at all, even buy one off the shelf from a formation agent (I understand that they can even provide one with ready made banking facilities if you wish this).
  2. Change the name of your existing company to anything other than what it is now - even something as small as changing it from A Company Limited to A Company (UK) Limited.
  3. As soon as the existing company's change of name has been registered at Companies House, change the name of the newly set up company to that of the former. (A director I know of changed the names of two companies to: Out With The Old No1 Ltd and Out With The Old No2 Limited and then folded them. New companies were then set up using the old names.)
  4. Fold existing company as it is not in a position to continue trading.
  5. New Company offers to take on those employees made redundant by the old company.
  6. Job done.
Because of the HUGE FINANCIAL RISKS of being an employer, and also because the main company (through our hard work) has accrued a decent asset base, we took the decision some years ago to have a separate company called A Company (Employment) Limited. This company took over all the employee rights under TUPE as the new employer and it pays all the employees. It then bills A Company Limited each month for "Employment Services". Even though we treat all our workers with respect, should the worst happen and we ever lose a ET case, as this second company has no assets it will simply cease to trade and a new company will be set up. It does cost us extra though - accountants fees etc amounting to about £1,000 a year. It gives us great peace of mind though knowing that our assets are protected.
 
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Don't overlook any premises that the company trades from though. If you have leasehold premises you will need to assign them to the new company with landlord's consent before the old company is wound up. Or negotiate a new lease with the landlord and a surrender of the old one.

You will also need new bank accounts as the legal entity will not be the same even if the name is the same.
 
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We are actually moving premises- our lease is up and the landlord wants to raise the rent so much it doesn't make sense to stay there! We will be moving within the week so no problems with lease etc- all will be under the new company name!
 
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