No money for redundancy payments

[RainyDay]

I'm a bit lost on this. The workers are entitled to statutory redundancy and will be paid by the state, from the contributions made over the years. So there is no issue surely?

Statutory redundancy payment is the responsibility of the employer.

From [broken link removed].

"In the first instance it is up to the employer to pay the statutory redundancy lump sum to all eligible employees. However, where the employer is unable to pay or refuses or fails to pay, the employee can apply for direct payment from the Social Insurance Fund"​

Payments made to the Social Insurance fund by both employer and employee cover social insurance, including healthcare and various social welfare benefits. While there used to be a rebate of statutory redundancy, this has been cut back, like many social welfare benefits.

Past payments to the Social Insurance fund do not allow the employer to cop-out on his legal obligations to pay statutory protection and to choose instead to repay suppliers. That would be equivalent to Sean Dunne coming out with the 'I've paid plenty of tax over the years, so I don't need to worry about repaying my debts to the State banks". The scheme for the State to pay statutory redundancy is a 'last resort' fallback position, not a financial engineering device.

 

[Purple]

Payments made to the Social Insurance fund by both employer and employee cover social insurance, including healthcare and various social welfare benefits. While there used to be a rebate of statutory redundancy, this has been cut back, like many social welfare benefits.

Past payments to the Social Insurance fund do not allow the employer to cop-out on his legal obligations to pay statutory protection and to choose instead to repay suppliers. That would be equivalent to Sean Dunne coming out with the 'I've paid plenty of tax over the years, so I don't need to worry about repaying my debts to the State banks". The scheme for the State to pay statutory redundancy is a 'last resort' fallback position, not a financial engineering device.

That’s a very disingenuous post. The provision has not been “cut back”, it has been removed. It used to be 60% of the cost, now its zero.
The only benefit the employer gained from the 10.75% rate they pay was that rebate. They now get nothing.

 

[mandelbrot]

Statutory redundancy is a contingent liability, and nothing more than that, until the day you know you can no longer continue to trade your way out of a difficulty. The money you owe your creditors is an actual liability, as soon as they provide you with their goods/service.

By RainyDay's logic no company could ever trade through a difficulty, as they'd be ethically bound to cease trading as soon as their reserves fell below the level required to pay employees their redundancy.

If all small employers, or even bigger ones, were to operate according to that proposal, i.e. maintaining a sufficient reserve of money to pay all employees' redundancy entitlements, it would effectively mean any business experiencing even a minor cash flow issue would have to liquidate itself, as by RainyDay's code of ethics it would not be able to pay its creditors and therefore would very quickly not be able to carry on.

In other words it would require all businesses to operate with an ever increasing amount of capital tied up (as employees' years of service racks up) to cover a potential liability that may never arise...

The consequence of which would be, less PAYE employment and greater use of subcontracted labour which in unskilled sectors has been proven to result in wage deflation, much more frequent turnover of employees, much more frequent liquidations, and a generally more difficult business environment...

Unless I'm missing something?

 

[RainyDay]

Statutory redundancy is a contingent liability, and nothing more than that, until the day you know you can no longer continue to trade your way out of a difficulty.

And for the OP, that day is the day they wrote the post, as they knew and had clearly decided that they wouldn't be trading out of the difficulty.

And yet, the OP (and most others) seem justified in manipulating events and the remaining pot of money to ensure that creditors get their full payment and employees get nothing. That's what you're missing.

 

[mandelbrot]

And for the OP, that day is the day they wrote the post, as they knew and had clearly decided that they wouldn't be trading out of the difficulty.

And yet, the OP (and most others) seem justified in manipulating events and the remaining pot of money to ensure that creditors get their full payment and employees get nothing. That's what you're missing.

Ah would ya climb down off your high horse - why do you assume the OP is aware of the legal order of priority of creditors?! And don't forget, the biggest creditor at this stage is most likely himself, and that one won't be getting paid.

Now that he's been told it may change his plans.

So again, by your logic, the OP should actually already have shut down his business, and those guys will be no better off financially but out of a job 12 months sooner... if you were a doctor RainyDay, methinks you'd be the type to kill the patient and then say you'd cured the disease...

 

[Bronte]

Ah

And don't forget, the biggest creditor at this stage is most likely himself, and that one won't be getting paid.

And it seems this is only too true because Gracey in the first post menioned he has been keeping the business going from his own savings.

 

[Bronte]

And for the OP, that day is the day they wrote the post, as they knew and had clearly decided that they wouldn't be trading out of the difficulty.

And yet, the OP (and most others) seem justified in manipulating events and the remaining pot of money to ensure that creditors get their full payment and employees get nothing. That's what you're missing.

I don't know what you are reading different to the rest of us. The opening post was clear that the poster is trying to do their best for everybody, the suppliers and the staff and has kept the business going via their own savings and has managed to employ people for 10 years. That's something to be commended not attacked.

The poster came on here to AAM to seek advise on the correct way forward. You turning that into something dodgy or underhand is unfair. And it is surely offputting to the original poster.

 

[Purple]

If the creditors (suppliers) don't get paid they may have to lay off some employees and in turn have to pay redundancy. Missing that is what happens when you look at the world through a one-eyed socialist dogma instead of in a balanced rational way.
Most employers place the welfare of their employees (or "Wurkers" if you prefer) at the top of their priorities. The OP has done this in spades and should be lauded for doing so, not attacked because of a "Wurkers Good, Employers Bad" slogan playing to the air of The Internationale in the head of posters reading this thread.

 

[Brendan Burgess]

That is all folks

Brendan