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Max Lowry
Max Lowry, Solicitor
Category: UK Employment Law
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Experience:  LLB, 10 years post qualification experience
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I have been provided with a contract of employment for a non-trading

Resolved Question:

I have been provided with a contract of employment for a non-trading company who is submitting dormant accounts on Companies House. Is this legal? I was under the impression that a non-trading company is unable to offer a contract of employment as the company would need to place the salary through the accounts which would have to make the company trading.
Submitted: 1 year ago.
Category: UK Employment Law
Expert:  Max Lowry replied 1 year ago.
Hi welcome to Just Answer.

Does the company have money or income to pay salary?
Expert:  joannem1965 replied 1 year ago.
Hi there it's not relevant if the company's dormant or not. Just because you're employed by them and they've given you a contract doesn't mean they're the ones that have to pay you as well. It's not unusual for someone to be employed by one company and be paid by a different one, this happens for example when someone's employed by one group company but they'll get paid by another group company - they may belong to the same group but they'll still be different companies. If the company's the one that's paying you then these payments will have to be reflected in their accounts but that's up to them to resolve. If someone else is paying you then that's not a problem as long as they're deducting the taxes needed by law. The rest you shouldn't have to worry about
Customer: replied 1 year ago.

I am still unclear. On companies house it specifies "To remain dormant, a company cannot have paid employees because it would have to record their wages in the accounting records." So a dormant and non-trading company can provide a contract of employment under that dormant and non-trading company as long as another company pays the wage?

Expert:  joannem1965 replied 1 year ago.
Yes they're able to provide a contract of employment but that doesn't mean they have to be the ones that pay you too. If they're starting to pay employees then they won't remain dormant. It's the non-payment of wages that'll keep it dormant though if someone else or another company's responsible for the wages and puts them through their accounts then they can do that and remain dormant
joannem1965, Advocate
Satisfied Customers: 264
Experience: LLB (Hons), LPC
joannem1965 and 4 other UK Employment Law Specialists are ready to help you
Expert:  Max Lowry replied 1 year ago.
If you have a contract of employment with a company, it will be that company that pays you.

Companies House is correct. If you have a company that is paying staff, it is paying them for a reason, and that reason would be connected with the carrying out of the business. Therefore, it is the case that if staff are engaged, the company must be active in some capacity and hence, will be considered to be a trading company for the purposes to which you refer.

There cannot be a situation where another company pays you legitimately, to do so would likely be fraud on the company, unless it in turn was owed money by a third party company and it was paying you on its behalf in discharge of some legitimate debt.

Your initial assumption was correct - I am afraid this is a different view to the other expert, which I appreciate is unhelpful to you. But, both your initial view and that of Companies House is correct.

Hope this helps.

Max Lowry, Solicitor
Satisfied Customers: 1399
Experience: LLB, 10 years post qualification experience
Max Lowry and 4 other UK Employment Law Specialists are ready to help you

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