Failure to pay the minimum wage sees Manchester nursery owner banned for six years
Nursery owner, Joanne Ward, 43, who failed to pay 12 members of staff the minimum wage at her nursery, Cygnets To Swans, in Manchester, has been disqualified for 6 years from being a director of a limited company.
Ms Ward gave an undertaking to the Insolvency Service not to manage or control a company for six years from 24 February 2016 until 2022.
While a director of Cygnets To Swans Limited, she failed to ensure that the company complied with its statutory obligations under the National Minimum Wage Act 1998 to ensure that employees were paid the minimum wage.
Following visits from HMRC national minimum wage enforcement officers in 2012 and 2013, it was discovered that 12 employees had not been paid the minimum wage dating back to 2010 and the company was issued with a £5,000 penalty, the maximum fine at the time, which remained outstanding at the date of liquidation.
Additionally, whilst Ms Ward was not paying staff the minimum wage, she received personal benefits from the company totaling £157,601 in the form of wages, dividends and through an overdrawn directors loan account.
Robert Clarke, Group Leader, Insolvent Investigations North, said:
The Insolvency Service rigorously pursues directors who break employment laws. Not paying staff the national minimum wage is a clear breach of a director’s duties.
The public has a right to expect that those who break the law will face the consequences. Running a limited company means you have statutory obligations as well as protections, and this should serve as a warning to other directors who are tempted to underpay staff.
Notes to editors
Ms Ward’s date of birth is 12 September 1972 and she resides in Prestwich, Manchester.
Cygnets To Swans Limited (04409834) was incorporated on 05 April 2002 and traded as Cygnets To Swans, a nursery, from 42 Whittaker Lane, Prestwich, Manchester, M25 1FX.
Ms Ward was the sole director from 5 April 2002 until 8 October 2015. The Company went into Liquidation on 8 October 2015 with an estimated deficiency of £65,195, including the penalty imposed for non payment of the national minimum wage.
On 3 February 2016, the Secretary of State accepted a Disqualification Undertaking from Joanne Ward, effective from 24 February 2016, for a period of 6 years. The matters of unfitness, which Ms Ward did not dispute in the Disqualification Undertaking, were that:
I caused Cygnets To Swans Limited (“Cygnets”) to engage in practices contrary to the National Minimum Wage Act 1998 by failing to pay employees the national minimum wage, whilst continuing to take personal benefits from the company:
- From 01 April 2010 Mrs Ward refused or neglected to pay 12 employees the national minimum wage, with wage underpayments totalling £11,789.
- HMRC issued Cygnets with the maximum fine of £5,000 for non payment of the national minimum wage, which remains outstanding at the liquidation.
- Accounts for years ending 30 April 2011, 30 April 2012, 30 April 2013 and 30 April 2014 show that Mrs Ward received benefits, in the form of wages, dividends and an overdrawn directors’ loan account, of £157,601.
A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:
- act as a director of a company
- take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
- be a receiver of a company’s property
In addition that person cannot act as an insolvency practitioner and there are many other restrictions are placed on disqualified directors by other regulations.
Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.
Further information on director disqualifications and restrictions is available.
The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice.
Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.
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Published: 4 March 2016
From: The Insolvency Service