How can I pay redundancy if I don’t have any money?
As a company, you have an obligation to meet your financial commitments. Redundancy payments are a debt of the company, which will need to be met. If the company is legally insolvent, then the insolvency practitioners, administrators or liquidators handling this insolvency will look at how to make these payments.
Another option would be to provide your employees with a form, allowing them to make a claim for a payment from the National Insurance fund through the Redundancy Payments Office. If your business would become insolvent as a result of making the statutory redundancy payments, assistance is available from the Department of Business, Innovation and Skills (BIS) Redundancy Payments Service (RPS) and Insolvency Service, though you will be expected to repay the debt as quickly as possible. If you are in a position where you are struggling financially to meet your commitments, you need to seek advice with regards to your options and the potential liabilities of any of the company’s debts.
Furthermore, you must analyse the potential for these liabilities to transfer to any new company should a TUPE situation occur.
See also: The rules of redundancy