
Ask HN: New software engineer, startup failing to pay salary. What do I do? (UK) - austinscott
I&#x27;ve only been a software engineer for a few years, and joined a startup a few months ago. Things were going well, and I really enjoy the work and believe in the business. A few days ago we had an all hands meeting where the CEO explained that the company would not be able to pay anyone this month due to issues attracting funding.<p>From the sound of it it&#x27;s going to be at least a few months before any more funding arrives - but they&#x27;re hoping to keep the business running until that time, and pay people back at that point. I have some savings so I might be able to survive for a few months on those if I have to.<p>What are my options here? If they fail to pay me, is that breach of contract, and am I free to stop working immediately? If I leave, what evidence should I be collecting to document that I haven&#x27;t been paid so I can claim it back later if necessary? If I choose to stay what should I be asking for in return for taking such a risk?
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brudgers
_they 're hoping to keep the business running_

A company that isn't paying employees is not continuing to run.

 _If they fail to pay me, is that breach of contract_

I am not qualified legal consul and if the fine points of law are really
important, I recommend hiring competent legal consul experienced in these
matters.

That bullshit aside, if they are not paying you find another job. If the
company raises a fuss, I recommend the "fuck you, sue me" (FYSM) approach.
It's simple. If the company can't afford to pay employees, it almost certainly
does not have money to pursue legal action in regard to your contract even if
it thinks it has a case.

Usually, employee salaries are the last expense that a company keeps paying
because without employees things go down hill faster and there is less chance
of recovery. But if the company isn't paying you, then it almost certainly is
not paying other bills. And those creditors have lawyers and any money for
legal fees within the failing company will be directed at that problem first.

 _I have some savings so I might be able to survive for a few months on those_

A CEO who expects you to do that (or even asks), doesn't give a shit about
you. People of character are uncomfortable exploiting other people. The CEO
already has exploited a month of free labor to keep their hope of making money
alive. You are already out a paycheck. The CEO knew when the money would run
out a month ago. Instead of allowing you to get your affairs in order, the CEO
mislead you.

Misled you over money.

Good luck.

~~~
jerven
Get legal advice. If they are not paying you now, they might well not pay
other bills like unemployment insurance etc. That can ruin you later.

It's not fun but get qualified advice. With whom you can discuss your exact
case.

~~~
brudgers
I agree that there is a potential problem with taxes

I disagree with the advice that legal consul is urgent. Assuming the OP stops
working for free, tax issues, if they exist, have already occurred. Hiring a
lawyer does not change that. Determining if there is a problem requires
forensic investigation. If there is a forensic investigation, someone else
will be paying for it because it is their money. Without a forensic
investigation, there's no tax problem (like a tree falling with no one
hearing).

More importantly, the first order problem is finding a new job. Mucking about
with legal consul is a distraction from solving that. And again there is no
urgency. The normal circumstances are an employee finds this out long after
the fact and systems are tuned to normal circumstances and dealing with the
system normally is more straight forward.

In software terms, it's YAGNI in the best case and JIT in the expected worse
case. The worst worst case is only marginally worse than the worst expected
case.

------
chrisbennet
You don't gamble with employees paychecks and that's exactly what your CEO was
doing.

1\. Get your co-workers contact info. Keep in touch with them. Someday these
guys may bring you a job and vice-versa. Keep in touch with _all_ the people
you've worked with. Your "network" will help you in the future.

2\. Stop working and start searching for another job. This a horrible time for
looking unfortunately. "As much as I'd like to keep subsidizing your business,
I've got this whole 'eating and living indoors' addiction that I need to
maintain ."

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mattmanser
Hi, in the UK we have the Citizens Advice Bureau. It can help with a lot of
financial and legal questions/problems you have.

It is generally very good, and I would highly recommend you read their website
and talk to them first. Someone else has already posted the link and it sounds
like you should get the acas thing going asap.

Generally speaking in the UK not paying employees is a really big no-no.

What's even worse is he could have furloughed you all weeks ago and have the
government pay you all, and he instead kept going without the cash to pay, so
it sounds like he doesn't give a shit about any of you.

Do not trust any promise he makes, anything verbally agreed you should
summarise and email him from a personal email address you control, confirming
what was said and agreed.

------
davidajackson
> From the sound of it it's going to be at least a few months before any more
> funding arrives

The time interval sounds vague. If you had to pick a future funding outcome in
the current climate... it's not very optimistic for funding early stage
companies. And what's to say if some less than optimal funding terms come
around, your salary won't be cut because the company needs to weather the
storm? The longer you stay unpaid, the less leverage you have in the future
too because the less you can afford to entertain offers and interviews with
longer timelines (let alone send a lot of applications because you'll have to
be working). Probably better to frontload the job search and try to get
another offer.

------
onebot
Its not a good sign that the CEO didn't give any kind of warning. Pretty bad
practice. Not sure what their funding situation, history, types of investors
are etc. You will need to make your own risk assessment--but from the sound of
it so far, it seems high risk.

If you decide to stay, I would demand equity, warrants, and/or some kind debt
contract. If the company goes under, it would give you more power to be a
debtor--not that means anything to help get your funds.

~~~
shoo
> not a good sign that the CEO didn't give any kind of warning. Pretty bad
> practice

I agree. If management knew they might not be able to make payroll this month
they should have laid people off last month & paid up any/all outstanding
wages. The fact that they didn't means they are making decisions that do not
respect their employees interests or existing employment contracts.

I'd stop work immediately, quickly make copies of any documents (timesheets,
email trails etc) capturing some evidence of days of work you have done that
have not yet been paid for, and switch to full time job searching for an
actual job.

Send brief written communication that you regard any previous employment
agreement as broken since company is unable to fulfill its side of agreement
by paying wages, state how many days unpaid wages you are owed and request
payment.

When applying for new jobs, if asked why you are looking, frankly state that
you are looking for work as your previous employer was a startup that ran out
of money to cover payroll. Anyone who is vaguely professional will immediately
understand.

For another point of view, see: [https://www.askamanager.org/2012/09/my-
company-isnt-paying-u...](https://www.askamanager.org/2012/09/my-company-isnt-
paying-us.html)

------
apohn
This happened to me in one of my first real jobs. It was a very small company
and I'm in the US. I worked for 7 weeks with while my paychecks bounced. It
took me that long to quit because the economy was bad and I didn't want to
burn relationships with anybody. Looking back now, I was too young and naive
to realize I should have stop showing up the day the first paycheck bounced. I
never kept in touch with anybody, so the whole "relationships" logic was wrong
as well.

I eventually got my pay after constantly contacting the CEO and basically
begging for it. I think he took it out of his personal savings or borrowed it
from a friend. I wonder if one of the other employees went through the legal
route and that scared him into paying everybody.

The company never recovered and obviously not being able to pay me was a huge
sign that the company was mismanaged and had bigger issues that would lead to
failure.

I'm not going to advise you on legal issues, but I will say that you should
use your time to find another job. If you're not getting paid to work, you
should be focused on your next steps, not helping the CEO keep their business
running for free. Imagine if you work for 2 months, the company closes, and
then you have to go through legal channels to get even a small bit of money.
It's just a waste of your time and life.

------
sloaken
1) Start a job search - this is job 1 2) Continue to work - in your spare time
Your pay at your next job is higher if you are currently working. When they
ask why are you leaving: They have warned us they are having payroll issues.
3) Network with your co-workers. Ideally set up regular meetings (weekly) to
discuss your respective job searches and to motivate each other.

------
cpach
Here some info that could be useful:

[https://www.citizensadvice.org.uk/work/rights-at-
work/pay/pr...](https://www.citizensadvice.org.uk/work/rights-at-
work/pay/problems-getting-paid/)

[https://www.theguardian.com/money/work-
blog/2012/jun/28/your...](https://www.theguardian.com/money/work-
blog/2012/jun/28/your-rights-employers-dont-pay)

------
graememcc
If your company declares itself insolvent and makes you all redundant by
reason of insolvency, then you would be able to claim missing salary, pension
contributions, holiday, redundancy pay and (if applicable) pay in lieu of
notice from the Redundancy Payments Service, albeit with the payment for each
element being capped. From recent experience, once you've made your claim,
they pay out pretty promptly once a liquidator has been appointed.

Unfortunately that does require your company to take that step, which it
sounds unwilling to do. (It is normally an offence for directors to continue
trading a company whilst technically insolvent, but that has been rescinded
temporarily due to coronavirus).

If you weren't still employed by them if/when they do declare insolvency, then
I suspect you would be treated like any other unsecured creditor with regards
to your missing payments.

------
ayush--s
> the CEO explained that the company would not be able to pay anyone this
> month due to issues attracting funding.

I don't think this will change in the recent future either. Really sorry for
the position you're in, but a job search should be your #1 priority now.

------
eschutte2
I would definitely stop working immediately and start lining up other work. If
you can't get them to pay out what they already owe you, get in touch with
whatever government agency in the UK handles employee pay issues.

------
faizmokhtar
Find a new job quickly. Don't spend your saving on this. I've made the same
mistake because I thought my situations might be different than all the
similar situations I've read before. It's not.

------
subhobroto
> If I choose to stay what should I be asking for in return for taking such a
> risk?

I think this is the primary question you are asking.

You are an experienced software engineer and with more and more companies
looking to hire remote workers, your market reach is ever-widening.

In other words, you can find a better, higher paying, more challenging job
anytime this week or the next.

So, the question you are really asking is what are the risks you are taking
and what would you like in return for taking those risks?

We cant answer that question without knowing, among other things, what risks
indeed you are taking - so what are they?

------
thorin
I suppose it depends on your personal situation. Definitely start looking for
work but if you really need the experience on your CV consider working for
free or privately trying to negotiate partial payment e.g. half pay or
expenses only. I'd imagine all the experienced/marketable people will leave
imminently so if they business does have any chance of making it in the future
maybe staying on for a little while may put you in a good position. Remember -
look after yourself as no-one else will!

------
imhoguy
[https://www.nidirect.gov.uk/articles/your-rights-if-your-
emp...](https://www.nidirect.gov.uk/articles/your-rights-if-your-employer-
insolvent) NI but it should be same across the UK.

------
dd82
Sure you're not working at Pandora? [https://thehustle.co/how-pandoras-
founder-convinced-50-early...](https://thehustle.co/how-pandoras-founder-
convinced-50-early-employees-to-work-2-years-without-pay)

------
Hackbyrd
What do you value? If you believe in the company and the mission and have a
good amount of equity, and you enjoy working with the people, and you dont
"need" the money right now, you should stay. If not, just leave and get a new
job.

------
celticninja
if you are not getting equity in the startup then you should not be investing
any time working in the hope that they do attract funding and can then pay
you. I would seek assurance that you will be paid for any missed wages but
also understand that that may not happen if they never get any funding.

------
0n3z3r0
What does your written contract say about renumeration?

~~~
avalore
Fun fact, I only recently discovered that "renumeration" is an incorrect
spelling used by many. It is actually "remuneration". I'd been spelling this
incorrectly for decades

~~~
Jugurtha
The same for "nucular" instead of "nuclear". The first time I heard "nucular"
was G.W. Bush on TV. I thought he was an idiot because a president of a
nuclear power ought to know how to pronounce a word _that_ important. I found
it more odd that many people pronounced it that way and thought they were
either mocking G.W. Bush, or emulating him. I was young and intolerant and
thought they were idiots, too. When I had heard it one time too many, I
figured there can't be that many idiots and looked up "nucular". I found out
that "nucular" has forced itself into the dictionary precisely because too
many people pronounced it that way and I was livid.

I eventually toned down my zeal because languages and people are dynamic and
ever evolving and reflecting on Montaigne's Essais, written in late 1500s
French, lead me to more understanding.

PS: I still consider that using "nucular" is insane.

\-
[https://en.wikipedia.org/wiki/Nucular](https://en.wikipedia.org/wiki/Nucular)

