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Ben Jones
Ben Jones, Solicitor
Category: UK Law
Satisfied Customers: 38604
Experience:  Specialist in UK Law with expertise in UK Employment Law
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How to get (Ex)Employer to pay owed money? I have a very

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How to get (Ex)Employer to pay owed money?

I have a very important question regarding an employer dispute on behalf of a relative who is not able to get online at the moment & we hope someone can help! I will try summarize her issue for you as best I can:

She recently left her job of 7 years in direct sales. When she left she was the sales director. She did not work a notice period (this is quite common in this company because if you are no longer interested, then there's no point sticking around and potentially negatively influencing others). Everyone works on commission-only & it is a very sensitive environment ie. if you have any mental doubt, you will not make sales and you will leave this job in a hurry.

She was employed on a work permit and then recently converted to ILR (a visa which allows her to stay indefinitely in the UK & no longer employer dependent) which is when she left the company.

Over the years she has earned alot of undeclared cash which her employer was fine with, but she was being paid a salary so that she was legally employed for tax purposes. She was still however, on commission only and she had to cover this 'salary' with her commissions. Any commission/income she would make over and above this amount was stored in a 'virtual company savings account' with the company, which totalled approximately £20k when she left the company.

At the time she left she agreed to be paid out her money gradually as a salary & so right now she is still officially employed by this company - the payments were made for 2 months but then they stopped. The balance is now £8k which she is owed. She does have email proof over the years of these monies and email proof that she would receive the salary until the savings was exhausted. She was receiving an earnings & savings update regularly from the office manager so this is all on the email.

After 3 months of trying to get in touch with her (ex)boss, she did and he says he will only pay her again when the sales team becomes 'profitable' MAYBE in March 2012 but in the meantime she has no income and no work as she was depending on this money.

She has spoken to some solicitors, but they will not handle her case because they have an obligation to report any tax evasion and so now she doesn't know how she can try get this guy to pay her without exposing herself to risk. She also fears that should she challenge this guy with a legal threat, he will try use this undeclared tax issue against her.

She has also considered taking him to an employment tribunal, but is worried this might also create trouble for her with this tax situation.

Basically she wants and needs her money now and does not believe that this guy will pay up next year, eventhough he says he 'intends to'.

1. In your opinion what should she do?

2. If this guy threatens to bring the tax evasion issue into light, what kind of trouble is he exposing HIMSELF to as an employer, who not only was fully aware of these earnings, but permitted and encourages the staff to put the cash in their pockets?

3. Can he make an argument that she was negligent or insubordinate in her job which could be factors on his side of the argument? (entirely untrue but he is a manipulative person)

4. He told her a while ago that he runs his business at a loss for tax purposes – could this be his saviour for not being forced to cough up?

Anyways we know it’s a long-winded story and quite complicated but if anyone can give her their opinion of the situation and any advice as to how she can get her money out, she would be very appreciative. She is so angry that this is happening to her after 7 years of dedicated service and never doing anything wrong to anyone over these years.
Submitted: 2 years ago.
Category: UK Law
Expert:  Ben Jones replied 2 years ago.
Hello and thank you for your question, which I will gladly help with. Please let me know if these payments were contractually owed?
Customer: replied 2 years ago.
no there was no contract
Expert:  Ben Jones replied 2 years ago.

When was the last payment due? Does she admit this money has been illegally earned?

Customer: replied 2 years ago.
The money she is owed by the employer was legally earned. There is just some cash that was earned throughout the employment time which was not declared.

she left the job 09 June, received salary payments end June and end July, but there is still £8k owed and no further payments
Expert:  Ben Jones replied 2 years ago.
was she self employed?
Customer: replied 2 years ago.
she came to the uk in 2004 on a working holiday visa from South Africa (valid 2 years) & immediately found a sales job with this company - she earned relatively small amounts in cash and sometimes cheque for 2 years. Then in 2006 she was sponsored by the company on a work permit an since then has officially been on a salary, so taxes have been paid.

The commissions she earned from her sales had to cover this salary, ie. she had to make at least £588 per week in commissions to cover her salary. Any commissions/earnings above this amount which could not be paid out straight away by the company were simply stored in the afore-mentioned 'savings account' by the company & this figure built up over the years.

She was allowed to use the company credit card for personal purchases and even got the company to pay her rent for her for a while, all of which were just deducted from this savings amount.
Expert:  Ben Jones replied 2 years ago.
Was it her responsibility to sort out her taxes or her employer's?
Customer: replied 2 years ago.
The official salary was 'constructed' because of going on the Work Permit - everything had to be legitimate with HMRC. She was put on a salary of what amounted to £588 per week before tax and she just had to make sure that the sales commissions she made each week covered that amount.

The company was responsible for the taxes and NIC on this salary. There was no 'self-employed' status as she was a legitimate employee

Expert:  Ben Jones replied 2 years ago.
If she is owed money which was legally earned then she has the option of taking this further. If the money was illegally earned she cannot pursue it through court as they will not hear her case.

If the employer exposes the tax issue to HMRC how this will affect him very much depends on what their liabilities were. If they were responsible for paying her tax and NI contributions but failed to do so they will be exposing themselves to a potential penalty as well.

If they raise an argument that she was subordinate, etc that does not mean they can’t pay her what she is legally due so this would not be a valid argument. Similarly, if he runs the business at a loss that is nothing she should be concerned about – how the business is run should not affect her entitlement to whatever commission she is legally due.

If she is experiencing issues with recovering money that she believes is legally due to her, she has the option of pursuing this as a debt. She should follow these steps:

1. Reminder letter – if she has not sent any informal reminders yet she should to this first and allow the debtor to pay her voluntarily.
2. Letter before action – if she has sent informal reminders but these have been unanswered, she needs to send the other side a formal letter (preferably by recorded delivery) asking them to pay her the money that she is owed within a specified period of time, for example 7 days. Advise them that if they fail to do so, she will have no other option but to commence legal proceedings to recover the money owed. This letter serves as a ‘final warning’ and gives the other side the opportunity to resolve this matter without the need for legal action. It is therefore essential that it is sent.
3. If they fail to pay her as requested and do not contact her to at least try and come to some form of arrangement, she can take this to the next stage and commence formal legal proceedings. If she is just trying to recover money she can submit her claim online by going to www.moneyclaim.gov.uk. There will be a court fee to pay depending on the amount she is trying to recover but it will kick start the legal process and hopefully prompt the other side to resolve this without the need to go to a formal hearing.

Please press Accept for the advice given so far. I can then provide more detailed advice and guidance as required. I will also answer any specific questions you may have. Thank you
Ben Jones, Solicitor
Category: UK Law
Satisfied Customers: 38604
Experience: Specialist in UK Law with expertise in UK Employment Law
Ben Jones and 3 other UK Law Specialists are ready to help you
Customer: replied 2 years ago.
thanks for your help so far Ben, I hope its ok to ask a few more questions - just need a few minutes

Expert:  Ben Jones replied 2 years ago.
yes of course
Customer: replied 2 years ago.
We're a bit confused by what you mean by 'whether the money was legally or illegally earned';

- the monies in this savings 'account' are composed of commissions from personal sales, team-members' sales, commissions from bookings which resulted from these sales (above a minimum amount), and also a £250 bonus that the employer was paying her each week (a 'wage' because of how much time she was spending in the office doing management things instead of out in the field selling)

At the moment & as it was, these 'monies' are just on paper until they are actually paid out. They were supposed to be paid out in salary payments after she left the company, which would make it 'legal earnings' as they would be taxed and she has no problem with this.

The only records she has of these monies are emails from the company's office manager/s which update this amount (mostly weekly updates in the last 1/2 years).

The actions that have happened:
1. After being fed up with no answers and no information about not being paid her salary for 3 months, she sent an email to the employer demanding to know why she was not being paid and what is happening
2. In response, eventually last week her ex-boss called her to explain why she had not received any payments - he claims that he 'intends' to pay whats owed but only next year when the sales team she was in charge of becomes a 'profitable entity' plus he is being spiteful because he says she left the sales team in a 'mess' which put him in a sticky situation. She asked if there was some kind of compromise they could come to and all he said was 'call me next week to suggest a compromise'. that was that
She doesn't feel she SHOULD try compromise because she has already compromised enough by allowing him to pay her the money out gradually and not being paid anything now for 3 months. She thinks that he reckons she will just drop it & that he actually won't pay up, and that he's making up reasons why not to pay.

So she is now in a quandry - as mentioned, she has spoken with some solicitors but they will not take the case on as soon as they found out about the unpaid taxes. what now?
Expert:  Ben Jones replied 2 years ago.
ok I will take a look at your queries and get back to you this afternoon. No need to repsond in the meantime, thanks
Customer: replied 2 years ago.
hi ben, any further info you could come up with?
Expert:  Ben Jones replied 2 years ago.
Hi, still working on them - it's been quite a busy afternoon
Expert:  Ben Jones replied 2 years ago.
What I meant by illegal money is if this was earned through unlawful means, which would usually mean either by working when she had no right to work in the UK, or by accepting cash in hand or other ways of avoiding tax.

In terms of taking this further, she does have the option of doing this on her own – she does not actually need a solicitor to do this. Had the amount been under £5,000 she could have taken this to the small claims court which is reasonably straight forward, otherwise she would need to go higher up and whilst able to do this on her own still, it may not be as simple as the small claims
Customer: replied 2 years ago.
hi ben, sorry popped out. So with all the information we have given you, what are the next steps YOU would take if it were you?

from what you have said she clearly doesn't really want to take this the legal route because of potentially exposing herself to any implication, but she still is not willing to drop it because £8k is alot of money.

she has thought about the things he has 'claimed' on the phone last week and she has found most of them to be false, and knows this from speaking with ex colleagues as well the upper management(who are good friends too) who still work for the company, who are all on her side

she might not have a strong 'legal' leg to stand on, but that doesn't mean she can't call him up, tell him the truthful information she has gathered & threaten:
1. To let everyone who currently works for him (who love & respect her) know what he is trying to do (the last thing is for his reputation to tarnished with people that STILL work there)
2. To take him to an employment tribunal which apparantly she has until end of Nov to do (within 3 months)
3. Failing that, if he still does not comply, threaten to start legal proceedings (although she probably does not want it to get that far)

Please advise what you think would be the best thing to do - I'm not saying that she will go take your recommended course of action, but she is really lost here & feels very victimized & like her hands are tied...
Expert:  Ben Jones replied 2 years ago.
I'm about to go offline now but will be back in the morning, thanks. No need to reply in the meantime, thanks
Expert:  Ben Jones replied 2 years ago.
Hello again, if she admits that she has tax liabilities, then anything she does next will have to be done with the risk of this being exposed and her having to pay this back, including interest. There is no getting out of this. To put it bluntly she can’t have her cake and eat it – I know she wants to have the money she is owed but at the same time she has a very strict liability to the state to pay her taxes and trying to avoid doing that will not get her any sympathy.

There is nothing stopping her doing what you have proposed and even going as far as making a claim against him but she has to always remember that the tax liability is something that could come round and bite her irrespective of which options she follows
Customer: replied 2 years ago.
understood loud and clear - thanks so much for your help. If we have any other questions for you are you going to be willing to help?
Expert:  Ben Jones replied 2 years ago.
Thanks, I just need to go offline for a short while but will fully answer your question either later this evening or tomorrow. Apologies for the slight delay but we are not on full time at weekends. Please do not respond in the meantime as that will send your question to the back of the queue and you may experience a delay. Thank you
Expert:  Ben Jones replied 2 years ago.
Sorry about the delay - would certainly be happy to help if needed further. Just start your question with Hi Ben and it will get to me, thanks

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