D C writes: I was a 15% shareholder and director of a very profitable
company. I resigned some months ago, and the company agreed to repay my
director’s loan account of £25,000 when I left. Later they informed me they
would not be repaying my loan. All the shareholders have similar loans to
the company. The loan arose as a result of a bonus, for which I have a
payslip and have paid PAYE and National Insurance. I have offered my shares
for sale but, in the absence of being offered full value, I will hold on to
them. Is it possible to force the company to repay the loan?
This is really a simple matter of a contractual relationship between you, a
creditor of the company, and the company, writes Ian Robert, corporate
recovery partner at Kingston Smith LLP. Despite no longer working for
the company, you are owed money by the firm as an unsecured creditor, and it
appears that you have evidence that the money is owed.
It is assumed that you do not have a shareholders’ agreement or other written
agreement that dictates when or how the loan might be repaid.
To recover the debt, you would be advised to issue a statutory demand. If the
company does not pay this in 21 days, you can go to court to wind up the
firm. This is obviously a draconian measure, but as an unsecured creditor of
the company, this is the best way of forcing it to pay up. The petition cost
is about £1,000 plus lawyers’ fees, which would be paid by the company if it
settles the debt to avoid liquidation.
You should start by threatening to take this course of action, hoping the
company will pay up before you have to incur any costs.
CHANGING HOURS
SJ writes: I want to look at changing the terms and conditions of my
employees, most especially working hours. Currently my employees work 9am to
5pm but I wish to start them half an hour earlier and give them an hour for
lunch as opposed to 30 minutes. How do I go about changing terms? Are there
set procedures?
There must always be good reason for changing contractual terms, writes
Peter Done, managing director of Peninsula, and you must always consult
with employees, informing them of all the facts before making a decision.
Ask for co-operation in the matter, and make sure you listen to employees’
views and any problems they have.
If your employees agree to the change in hours, this should be confirmed in
writing within a month of the change taking effect. You should never
forcibly impose a change of contract without an overwhelming need to do so.
Be sure the changes are necessary for the business and that any other options
have been considered. Consult employees to minimise any adverse impact your
proposals may have on them and to reach an agreement. If, despite strenuous
efforts and full consultation, you are unable to gain your employees’
acceptance, you need to decide whether to withdraw or impose the change.
If you decide to impose the change, extended consultation must take place with
any employee who refuses to accept the new regime. During this time the
employee should be warned of the possibility of dismissal if he refuses to
accept the changes. The employee should be given sufficient notice that the
old contract is being terminated, with a new one being offered at the end of
the notice period. This notice period must be worked and payment in lieu is
not an option.
During the notice period the employee may still accept the new contract and
continuity of employment will be preserved, along with any benefits. If the
employee continues to refuse the new contract, then at the end of the notice
period this is deemed to be a dismissal.
Persuasion is clearly the better approach and remains the good employer’s
normal means of making changes to contracts.
Kingston Smith LLP, the chartered accountant, and Peninsula, the
employment-law firm, can advise owner-managers on their problems. Questions
should be sent to The Business Doctor, The Sunday Times, 1 Pennington
Street, London E98 1ST, or faxed to 020 7782 5765. Advice is given without
legal responsibility. bizdoc@kingstonsmith.co.uk
