NSW Can a director, who is an employee of the company as well, forgo his salary for few months due to business losses incurred during pandemic period?

Australia's #1 for Law
Join 150,000 Australians every month. Ask a question, respond to a question and better understand the law today!
FREE - Join Now

Saru

Active Member
25 March 2019
7
0
31
Hi

The director of an IT company who is an employee as well, wants to voluntarily forgo the salary (as an employee) for few months due to the business losses incurred (as there is no product sale made) during pandemic period. The business is incurring losses every month, he wants to keep paying other employees and run the business until a sale is being made. Is it lawful to do so and if it is allowed, is there any process that needs to be followed?

Thanks
Saru
 

Tim W

Lawyer
LawTap Verified
28 April 2014
4,074
737
2,894
Sydney
Incurring ongoing losses....
The business is probably already insolvent...?
 

Saru

Active Member
25 March 2019
7
0
31
Hi

The director of an IT company who is an employee as well, wants to voluntarily forgo the salary (as an employee) for few months due to the business losses incurred (as there is no product sale made) during pandemic period. The business is incurring losses every month, he wants to keep paying other employees and run the business until a sale is being made. Is it lawful to do so and if it is allowed, is there any process that needs to be followed?

Thanks
Saru
This is the business monthly ongoing losses. no, the business is not insolvent. the director is introducing loan as and when required.
 

Saru

Active Member
25 March 2019
7
0
31
This is the business monthly ongoing losses. no, the business is not insolvent. the director is introducing loan as and when required.

This is the business monthly ongoing losses. no, the business is not insolvent. the director is introducing loan as and when required.
Are we allowed to hold on the pay of the director? Will there be any issues in doing so?
 

Tim W

Lawyer
LawTap Verified
28 April 2014
4,074
737
2,894
Sydney
An employee can agree to postpone payment of a salary/ wages.
But it has to be 100% their idea.

Remember also that the employees are creditors of the business.
So, when this business goes south, which I suspect will be soon,
there will still be a debt owing to her/ him.