Staffing agency placed into Creditors’ Voluntary Liquidation

Blog Liquidation

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A staffing agency has been placed into Creditors’ Voluntary Liquidation after failing to pay what it owed to workers.

The company supplied manual labourers to agricultural companies in Hertfordshire, but ran into trouble after it failed to correctly pay its staff for their work undertaken for the contract businesses.

The Insolvency Service was called in to investigate in 2009 and discovered that the agency had failed to pay the National Minimum Wage over a period of time, meaning workers has lost out on close to £69,000.

According to the report, the agency had in fact paid the correct wages but incorrectly deducted the costs of transporting workers to the contract business.

The agency was investigated twice over a period of two years for consistency failing to correctly pay workers.

HM Revenue & Customs (HMRC) found that between August 2010 and January 2011, the business had paid some 246 employees less than the legal minimum wage and owed more than £110,000 in back pay.

The report shows that workers were still not paid by 2015 and HMRC took steps to lodge a claim against the agency to recover the money owed.

But due to its growing liabilities, the agency faced no choice but to enter Creditors’ Voluntary Liquidation in September 2016.

In addition, the director of the company was banned from acting as a director or controlling a limited company for a period of seven years.

Dave Elliott, Head of Insolvent Investigations (Midlands & West) for the Insolvency Service said: “The fact that the director was investigated on two separate occasions, shows that this was not the case of administrative error but a wilful act on his behalf.

“The director fully deserves his ban after cheating his workers out of what was rightfully theirs and this should serve as a warning to other directors that they have a duty to comply with regulations or else be banned from running companies for a long time.”

If your business is in financial distress, our advice is to act fast. The sooner you seek professional advice, the smoother the outcome and the easier it is to avoid complex investigations.