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.