Written by Jonathan Munnery, Insolvency & Restructuring Expert | Last updated: 7 April 2026 | Reading time: 4 mins
I can’t pay staff and employee wages
Help for companies unable to afford staff wages
If you can’t afford to pay staff or employee wages as your company is out of cash, your company may be cash flow insolvent. Without staff, company operations can quickly collapse, resulting in the end of your business. The key to a healthy business is a motivated workforce that is remunerated fairly, on time, every time.
As labour costs rise, including the National Living Wage, National Minimum Wage and Employers’ National Insurance Contributions, companies must set aside more funds to cover staffing costs which can squeeze company cash flow. With general running costs also increasing, such as energy bills and borrowing costs, you may fall short of cash for employee wages.
I can’t afford to pay a salary to staff and employees
If you don’t have enough funds to meet payroll, the future of your business is at risk. As an employer, you must pay staff for their work in line with the National Minimum Wage or National Living Wage, depending on their age. If you fall short of funds to cover employee and staff wages, including at the right rate, you must do all in your power to raise the cash necessary to cover payroll.
Without an operational workforce, company operations will come to an end and inevitably trigger other financial problems. If you cannot afford to pay employee wages, inform staff early as this will have a knock-on effect on whether they can meet their financial obligations. While they may accept late payment as a one-off, this could jeopardise the employer-employee relationship and prompt them to seek alternative employment.
In addition to staff salary, you may need to consider auto-enrolment pension contributions.
I can’t afford auto-enrolment pension contributions
As an employer, you may be legally required to make auto-enrolment pension contributions. If the employee is eligible for automatic enrolment, you must pay into the pension scheme on their behalf every month, accurately and by the cutoff date. If you fail to pay into your employees’ pension, the Pensions Regulator will intervene to order payment, issue a fine, or even launch enforcement action.
If you cannot afford to pay staff and employees, there are a range of options available.
Professional support if you can’t afford staff wages
If you can’t pay staff salaries or make employee pension contributions, evaluate the root of the problem. You may require a cash flow boost to meet essential payments by taking out business finance or negotiating debt repayments with creditors. If this is a sign that your company is at the end of the road, you may consider closing your company.
Company finance – If you’re struggling to keep on top of essential payments, such as staff wages or auto-enrolment payment contributions, consider ways to raise additional cash. Business finance can unlock cash into the company and help you sufficiently cover expenses and running costs, including employee pay.
A variety of company finance options are available based on your needs, such as a business loan for general business use, or specialist finance to serve a particular purpose. Invoice finance is a popular solution for businesses that wish to plug the wait between invoice payments by unlocking the funds they are due in advance. This can provide an essential cash flow boost to help you meet your financial obligations to employees.
Company Voluntary Arrangement (CVA) – If you can’t afford to pay staff wages because you are servicing a high level of debt, consider negotiating debts into affordable instalments with creditors. A CVA can provide a gateway to repayment negotiations with creditors through the help of a licensed insolvency practitioner.
Creditors’ Voluntary Liquidation (CVL) – If your company is in severe financial difficulty and cannot afford to cover staff wages, you may consider closing the company. A licensed insolvency practitioner can initiate an orderly exit through a Creditors’ Voluntary Liquidation, a popular company closure route.
How we can help
If you cannot afford to pay staff wages, immediate action is imperative to secure your workforce and the future of your company. Our expert team of highly experienced licensed insolvency practitioners can advise on a range of options available. If you wish to close your company, speak with a member of the UK Liquidators team to discuss the best exit route for your company.
