BUSINESS CLOSURE OF 4-MONTH OLD BUSINESS DUE TO FINANCIAL LOSS

Good day!

I would like to seek for a legal advice on what happened to our business. We started as homebased freelancers with foreign clients. Then February 2014 we won a big client from UK. After gaining his trust, he gave us more projects and requested to hire more people for him to do other jobs. And so we did. And since we are just homebased, we needed to have more PCs and bigger space to accommodate those new hires. Then this client immediately advised us to get a space for rent and move there so we can already form a team that will work with the tasks he'll give us. He sent funds to finance all those that he needed. Gave funds to buy PC and to give for the deposit and advance payment for the rent. We rented an office space. We also registered the business (sole prop) under my husband's name since he is really the freelancer. It was June 2014 when we moved to an office space and have the business registered. Technically, all the properties are under his name. Our setup was like this, we just work for that client and we give him our rate per hour for every employee and every 15th and 30th, he will just send us the payment for the total hours that we've worked for him. So it's like that our salary is based solely on what the payment that he gave us. And since we are registered business here in PH, we need to pay all the gov't responsibilities. Then come September 2014, just 3mos of operations, when we got trouble with that client. He started to refuse paying us for some work issues. And of course this affected all the employees. And unfortunately, on the last half of September, the client no longer paid us the salary. We decided to close the business by mid of October and informed all our employees of what happened. And since the client didnt pay us, we also do not have funds to pay all our employees for their last salary (half of Sept). We just told them that we will try to pay them but cannot promise when. By the way, that client actually was already handled by our hired operations manager up until now. The client pulled his account to us, then our hired operations manager handled him. And some of our employees, still worked for that client just under the supervision of the operations manager who now is the general manager. They registered another business name for that client.
So after that, we got back to being homebased to recover from that lost. We really had P0.00 finances and had to start winning clients again to recover and start again. Our problem right now is that we have this 2 employees who are chasing us to pay them for the last pay that we havent given them, the last half of Sept. They are threatening us right now that they will write a letter to DOLE if we do not pay them since it is already 1 year ago and they haven't received any from us. We've been explaining to them that we are really having hard time to recover and that is the truth. Up until now, we are working without a regular pay and just enough to pay our monthly utility bills.
I just want to seek for legal advice on how to treat this situation? Are we really still oblige to pay them after what happened? What can happen if they complain to DOLE?

Thank you and hoping for your help.
Godbless.

" Are we really still oblige to pay them after what happened?"
Yes. (Except perhaps if they didn't follow the deal, when they switched from you, still working for same customer.)

But didn't the supervisor or the client BREAK any deal, when you lost the client?
What was the REASON the client switched from you to the supervisor?
Perhaps you have right to some compensation.

The lapse we had was that we hadn't finished the employment contract yet with our employee (supervisor) since everything was done in a short time and since all the employees were already needed to start. So i don't know if there's really something that we can use to prove that they break any deal. But business etiquette wise, yes. This supervisor, resigned. But admitted that she will work separately for that same client as a freelancer. And admitted to us also that this client had a plan to pull out the account from us and transfer the management to her, as this client had a trust issue on us due to miscommunication. Apparently, this supervisor, sided the client, had personal chat with the client and that happened. This client of course had the guts to pull out his account from us since he knew that he had someone whom he can transfer his projects to. This supervisor resigned 1st week of October, then 2nd or 3rd week of October, the client already pulled out his account from us. And didnt pay the last bill we issued him reasoning that he already had trust issue with us.

"This supervisor resigned 1st week of October, then 2nd or 3rd week of October, the client already pulled out his account from us. " Isn't the resign period longer than that?

" And didnt pay the last bill we issued him reasoning that he already had trust issue with us."
Well. Only missing trust is NOT legal reason to not pay allready DONE work,
it's only a reason to not continue...
To not need to pay anything or less legaly, the CLIENT need to PROVE your work had biger errors than what's ok.

"This supervisor resigned 1st week of October, then 2nd or 3rd week of October, the client already pulled out his account from us. " Isn't the resign period longer than that? -- what do you by this? It's like an immediate resignation. And her resignation and pull out of client's account almost overlapped.

But what i want to know is are we still oblige to pay those employees who also joined the supervisor in continuing to work with that client? with all the damages with the business. Also, most of the computers, they got it, reasoning that it is the client who gave the funds to pay for that computers. And the client, who is in UK, threatened that he'll do something we do not want if we did not give the computers to the supervisor. So to avoid any further trouble, we just gave them what they wanted so we can also move forward. So what we are thinking is that if we will get back to our previous employees, we just wanted to pay those who didn't join our previous client and supervisor.

I ment - is it ALLOWED for the supervisor to quit without a resign period?

The same question for the employees, who joined the supervisor working for the ex client.

IF the employee broke a deal with you, then you have counterclaim at them.
I don't know if you can need to pay MORE than the salary if you are sentenced to pay. Perhaps someone else can answer that, or you can check what DOLE say.
If that's nothing or litle extra, then I would just skip paying* them and MESSAGE them you have counterclaims at them, because they broke the deal. THEN it will be up to THEM if they will want bother to make a claim to get pay.
I don't know if it's possible in the Philippines to get the claims from BOTH sides be handled in SAME case, or if the payout can be hold until both cases are finnished.

*Or pay them the DIFFERENCE if your counterclaim is less than the salary.

Oh you gave away the computers to avoid trouble. By that you gave away the pressure to get pay for your bill. Then I suppouse you don't want to file any estafa to get pay for the bill, or get compensation by get (some) computers?` It depend of what the deal with the customer say, if the computers are the client's or your property.