What happens to my employees?
Not being able to pay your employees salaries due to the financial issues of your company is obviously a very unpleasant situation, both for you and for your staff. Below you will find some general information and tips on how to help handle this situation.
Tip 1: Keep talking to your staff
It is not the easiest thing to do at first, but you will probably prevent some of the misunderstanding. Starting the conversation with your employees gives you a chance to explain the state of affairs your company is in. Remember that non-communication has almost never made a situation better.
Tip 2: Try making an arrangement
You can ask your staff in times of crisis to surrender a portion (say, five or 10 percent) of their salary. You can also think about giving up some vacation days or other benefits. If you have a pension plan for your employees, it is also possible to agree with your employees that the employee contribution to the pension premium will be increased. Of course, here too, always make sure that you put the temporary agreements with your staff in writing. For this measure, you will have to appeal to the solidarity of your employees. Try to explain that if employees are willing to make some sacrifices, this will most likely lead to job retention and reduce the likelihood of (forced) dismissal.
If your business is having financial problems and you can no longer pay your employees' wages, your employees can get help from the UWV. Your employees can apply for a payment default benefit from the UWV when your company is in a state of insolvency. Being in a state of insolvency in terms of the UWV means that your company is in either one of the following four situations:
The judge has granted the company a temporary moratorium (suspension of payments) and appointed someone to take over financial management (an administrator).
The judge declared your company bankrupt and appointed someone to take over financial management (a trustee).
Your business can no longer get out of trouble and you are given a settlement by the court to pay off the debts. This is called a court regulated debt settlement.
Another situation where you permanently stop paying wages. And where the following applies:
- There is no prospect of restoring payments.
- (Almost) all employees are in this situation.
- Creditors are no longer being paid.
- There is no court ruling.
What the UWV does when granting your employees a payment default benefit is take over (part of) your payment obligation. In order for them to be able to do so, it is best you notify them of your inability to pay by calling UWV Phone Employers.
Applying for shorter working hours at UWV
If you have less work for your staff or cannot pay part of their salaries, you can apply to the Ministry of Social Affairs and Employment for a permit for reduced working hours. With such a permit, you arrange for your employees to temporarily work less than stipulated in their employment contract. For the number of hours your employees work less, you can apply to the UWV for WW benefit. UWV will then pay you the WW benefit for your staff. In most cases, this allows you to continue paying your staff's wages and your staff will not notice much of a difference. Supplementing the wages of your personnel is stipulated in many collective bargaining agreements.
If a judge has already declared your company bankrupt, the appointed trustee can discharge all of the bankrupt's employees with short notice. Wages from after the date of bankruptcy declaration will count as estate debt.
If the bankrupt's company does not cease to exist, but is restarted (in part) in another legal entity, often the employees transfer with it. They then conclude a new labor contract with the restarting company, but this may raise all sorts of questions regarding the continuation of certain employee rights.