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Thread: Closing down and severance pay

  1. #1
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    Closing down and severance pay

    I am about to shut down my manufacturing joinery business. It has been in operation for 26 years, but for the last six years we have not been doing well. I am about to have my 69th birthday. Although I had investigated selling the business, it isn't a good proposition for investment, so instead I have found employment at another company and hope to work for a couple of years before retiring. My questions are about severance pay.

    I have six members of staff. One is past retirement and took his retirement package four years ago. He is starting to forget things and so is not really employable anywhere else. Another person has taken early retirement, and works when he feels like working.
    There is one person who has 20 years service and is not ready to retire, and the other three are recent employees.

    The company that is employ me agreed to interview all staff for potential employment, but no-one turned up for an interview and it seems they may be wanting severance pay according to their years of service.

    The company has an overdraft, but other than that and current debtors there are no commitments. Staff will be paid up to shut down, they will get their leave pay, and depending on the state of the coffers, a bonus.

    Now the questions:-
    Am I right to say that the retired staff don't have any claim to severance pay?
    If they don't even appear for an interview, can they insist on severance as well?
    They all seem to be making plans to withdraw their provident fund, without looking for further employment. Does this change anything?

    I look forward to responses.


  2. #2
    Diamond Member Justloadit's Avatar
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    From my experience employees are entitled to one week pay for every year served. The fact that you are closing down, does not detract that you are required to pay the severance pay, along with leave pay, and any outstanding wages. This off course will place you in a deeper financial defecit. Those that have retired, says, that they have retired, so should not be working.
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  3. #3
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    Hey Frank,

    Some questions:
    1. Are you a member of, or working within the rules of a Bargaining Council? if so which one.
    2. Have you had minuted meetings with your staff to consult re: your intention to close?
    3. Why are retired people still working for you?
    4. What service do the newer employees have?
    5. Are any of your employees members of a union?
    6. Is your company registered?

    Answer those and it will be easier to more accurately assess your "way forward".

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