The Company I Work For Are In Trouble And Have Come Up With The Below Idea To Save Money On Salaries:-?
Posted by China Sourcing CommentatorSep 30
To pay staff in the form of a staff loan. This means that no payslips are produced and no national insurance is paid at source. Other than the obvious issue of no NI contributions (the tax and NINO will be paid up before the end of the tax year apparently) are there any other issues that can effect me as an individual?
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I’m not clear about this. Do you mean that you will not receive any wages for a while but that they will credit them to a loan account which will be paid to you later when they have the cash?
If so, then this will not affect the payment of tax and national insurance. These deductions are due when you become unconditionally entitled to them, not when they are physically paid. So they may have problems with the Revenue if they do not keep paying these over.
Your problem will be that you stand to lose out if the firm goes bust. It is almost equivalent to you being paid your wages and then making a loan back to the company. Think of it in terms of an investment. Are you happy to use your money in this way? If you feel the company has a good chance of survival then you might decide it is worth the risk of losing the money as it could protect your future income.
On the other hand, they may mean that your wages will stop for a while but cash payments still made to you as a loan. The position will then be that the company owes you wages and you also owe them the amounts paid to you. Now I’ve got this far I think this is the more likely approach they mean.
There should be no repercussions for you (other than the loss of NI contributions as you point out) as you will have the right to set off the money loaned to you against the wages owed to you if the company goes bust.
There can be benefit in kind problems as you will presumably not be paying interest on the loans made to you but providing this is a temporary measure it should all fit below the minimum disclosure levels.
Surely, if this is paid as a staff ‘loan’ and the company go into receivership, the receivers will see this as money owed to the company by yourself? This sounds like a very bad idea to me. Not only would you have worked for nothing, but have to pay back the ‘wages’ too. Can you afford to work for nothing and pay them back your salary?
I would refuse this idea completely. If you are even contemplating it I would go and see one of those free Saturday morning solicitors for free advice, and also consult your local tax office. If this is legal you want to cover your back so that you are not obliged to repay any money, and if it’s illegal you don’t want to be implicated and get a criminal record for going along with it. Unfortunately the law courts don’t allow you to get off a criminal charge just because you didn’t understand that what was going on was illegal.
get out of there as soon as possible, start filling in those job applications TODAY! This company are going downhill fast, time to move on. Also you must report your employers as what they are doing is highly illegal. Sorry but your job is effectively finished there’s not much you can do now but try and find another job as soon as possible.
Sure they are asking that you work for nothing.
If they still go out of business then you are out of not only a job. But you will also be out of the time you could be looking someplace that has the money to pay you. And they are not offering any company stock options etc. sound pretty shakey to me.
Go see Citizens Advise Bureau .. plainly your job has been terminated if you no longer receive a payslip, so you are entitled to Redundancy Money .. get your claim in quick (before they go bust) ..
NB. they are evading Tax & NI and, after they go bust, YOU will end up paying it !!!
If it’s a loan you are working for nothing and they’re letting you borrow money from them to live. You will have to pay the money back. Why would you work for nothing?
This seems more than a little unusual to me,if this is the case, I should find another job, where you have some security.
I would have to look up some more info to be specific (limited time right now), but, trust me – badddddd idea – and, more than likely, not legal.
Mate, if they’re in trouble that’s their fault, not yours … get paid, because if they go under, you won’t see a penny of it
Jump the sinking ship now before it’s too late.
It is illegal and you know it