When a company is in trouble, its people are among the first things a responsible director worries about. Their position carries both legal weight and human weight.
Wages are a priority
Paying staff is a priority both practically — without them there is no business — and legally, as employee claims rank ahead of many others in an insolvency. Protecting wages is usually the right first call when cash is short.
Be honest and lawful
If redundancies or restructuring become unavoidable, follow the correct legal process and communicate honestly. Cutting corners on employment law adds legal risk to financial difficulty.
Statutory safety nets
Where a company becomes formally insolvent, statutory schemes exist to cover certain employee entitlements. A licensed insolvency practitioner or Acas can explain how these work in a specific case.
Handling staff well protects both people and the value of any rescue.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: How to prioritise which bills to pay first, Directors' duties when a company is struggling, Managing the stress of running a struggling business.