My company cannot pay staff wages
Not being able to pay your staff is one of the clearest and most distressing signs that a company is in serious trouble, and it carries specific risks for directors. Employees are preferential creditors for certain amounts, and continuing to take on work or deductions while knowing you cannot pay wages can deepen insolvency and increase your personal exposure to <a href="/wrongful-trading/">wrongful trading</a> claims. At the same time, employees have strong protections: if the company becomes insolvent, staff can claim unpaid wages, holiday pay, notice pay and redundancy from the government-backed Redundancy Payments Service, within statutory caps. So while missing payroll is a red line that demands immediate action, it is not the catastrophe for staff that directors often fear, provided the company is dealt with properly through a formal insolvency. If you cannot pay wages this month, do not simply carry on hoping. Take advice from a Licensed Insolvency Practitioner straight away. Insolvency Service; gov.uk
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Act now, and the staff are protected
Missing payroll means applying the insolvency tests honestly and getting advice. If the company is wound up, employees, including director-employees, can claim from the Redundancy Payments Service, so a proper process protects them. See director redundancy for your own potential claim.
Common questions
What happens to staff if I cannot pay wages?
If the company enters a formal insolvency, employees can claim unpaid wages, holiday pay, notice pay and redundancy from the government-backed Redundancy Payments Service, within statutory limits. A proper process is how those protections are triggered.