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

This is time sensitive. If you have been served a demand or petition, options narrow fast. Speak to a Licensed Insolvency Practitioner today.

Key facts

What it signals: A serious sign the company may be insolvent
Director risk: Trading on while unable to pay deepens exposure
Staff protection: Wages, holiday, notice and redundancy claimable from the RPS
What to do: Take advice immediately, do not just carry on

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.

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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.

Speak to the right expert

Tell us briefly what is happening and we will arrange a free, confidential, no obligation introduction to the right expert for your situation, whether that is a turnaround adviser, a tax specialist or a licensed insolvency practitioner. The earlier you get advice, the more options you usually have.

Free, confidential and no obligation. We are an independent information service and introduce directors to the right vetted expert for their situation. This is general information, not regulated advice.