paying off employee

[RS4Roar]

Morning all

apologies for first post hijack here without introduction, however need a quick answer.

I'm director of my LTD company which has been trading over a year now, my wife has been an employee of the company since July last year.
we have now decided to separate, so going forward I would like to end her employment with the company as I also plan to shut the company down in the next month.

Can anyone advise on what's required to pay of the ex wife do I need to formally give her written notice etc. etc.
She is a 40% share holder in the company also, however she is not on the board of directors hence the reason I plan to shut down & start a fresh company

any help in this mater would be greatly appreciated

thanks

 

[Nord20]

I am not a lawyer, I recommend you seek employment legal advice.

I believe that as she has been employed by the company for less than 2 years, you do not need to give a reason to sack her (although you folding the company would be a perfectly adequate one).

Her being a shareholder has no bearing on her employment status - you can have one without the other (both ways round).

You would still have to give her formal written notice and either let her serve her notice period, as stipulated in her contract (if it isn't, then statutory notice), but you could give this as garden leave and just pay her for the time.

Obviously as a shareholder, she would be entitled to 40% of any assets once the company is folded. Be very careful not to re-use any of those assets, both tangible and non-tangible, in your new business without formally 'purchasing' them from the old business. Things like customers lists. The last thing you want in your divorce proceedings is to give her ammunition by handling the closing of the business wrong.

Your best bet is to just treat her fairly, move on, start afresh and don't look back. Good luck.

 

[David Griffiths]

She is a 40% share holder in the company also, however she is not on the board of directors hence the reason I plan to shut down & start a fresh company

Doing that without taking proper legal advice will be very foolish and potentially very expensive

 

[Nord20]

Just out of interest, how so? She isn't a director of the company, so the fact that they are married is irrelevant, no?

I suppose she could claim you, as director, are not acting in the best interest of the company, but if the directors unanimously decide to cash out the business, I really don't see what ground she would have to object.

That said, yes, definitely get legal advice before doing anything.

 

[David Griffiths]

J but if the directors unanimously decide to cash out the business, I really don't see what ground she would have to object..

That's why the OP needs advice from somebody who most definitely will see what grounds she would have to object.

Clue: look up the meaning of a director's fiduciary duties to his company

 

[RayLevy]

Hi

Regarding the query above, the fact that she is your wife or ex-wife doesn't matter in employment law. She is an employee and is entitled (or not) to employment rights according to her general status as an employee.

As she's been employed for less than two years, she is not entitled to unfair dismissal rights which means you can terminate her employment by giving her correct notice (meaning the notice in her employment contract or, if none, then one week per year of service).

However, winding up the company is a different matter. As sole director and majority shareholder you have the right to wind up the company, but what you don't have is the right to give away its business in the process.

We would need to look at what your business does. Does it have valuable intellectual property such as a brand name or website? Does it have long term clients that you are effectively transferring from business A to business B? Does it have a premises lease that needs transferring?

If so, then business B would have to pay business A a fair price for the purchase of those assets.

If there are assets or cash (eg proceeds of sale) left in the company at the time of winding up, those need to be distributed to the shareholders according to their shareholding.

However, that said, practically speaking if there is no shareholders agreement in place, the director is able to pay himself (as salary, not dividend) any cash in the business, so bottom line is that there may still be no funds left in the company to distribute to shareholders at the end of the day.

However, the above should still be carried out through a lawyer and properly documented. If you are going through divorce proceedings, then the wife's lawyer will be looking very closely at all of the assets and won't hesitate to get a court order stopping sale of the business or demanding an independent valuation of its assets. So you need to be advised on this.

Hope that helps.

Ray