Is it unethical to pay staff late if we're trying to survive?

Paying staff late is both legally problematic and ethically questionable, though the ethical judgment depends on context, communication, and whether it's genuinely a last-resort measure to save the business or simply prioritizing other stakeholders over employees. From a legal perspective, employees have statutory and contractual rights to be paid on time, and persistent late payment breaches employment contracts and can trigger legitimate employment tribunal claims, resignations without notice, and loss of key staff at the worst possible time. From an ethical standpoint, employees are in a uniquely vulnerable position—unlike suppliers or creditors who engage in business risk calculations, employees rely on wages for basic living expenses including rent, food, and family support, and they typically lack the financial reserves to absorb payment delays. Employees also cannot diversify risk the way suppliers can, making them particularly dependent on your business meeting obligations. However, there's a spectrum of ethical positions here. Paying staff a few days late while you wait for a crucial payment to clear, when you've communicated this to staff and explained it's a one-time temporary issue, is very different from routinely missing payroll by weeks, providing no communication or false promises, while you pay other creditors or extract personal funds. The ethical calculus changes if the alternative to short-term late payment is immediate redundancy—if delaying wages by a week gives you time to secure financing or complete a sale that saves all jobs, employees might prefer temporary delay over unemployment. However, this only works with absolute transparency: you must tell staff honestly why payment is late, what you're doing to resolve it, and what they should expect, rather than making excuses or hiding the truth. The ethical line is crossed when directors pay themselves while staff go unpaid, when late payment becomes routine with no resolution, when you're taking on new orders you know you cannot fulfill (including being unable to pay staff to complete them), or when you're using staff as unwitting credit providers to prop up a business you know is failing. At that point, you're not trying to save jobs—you're exploiting vulnerable employees to delay the inevitable. The most ethical approach when facing potential late payment is: Be completely transparent with staff before payment is due—don't wait until payday then announce delay. Explain exactly why payment is late and what you're doing to resolve it. Pay as much as you can, as soon as you can, rather than paying nothing while waiting for complete funding. Prioritize staff payment over discretionary spending, dividends, director payments, or non-critical creditors. Give staff honest assessment of whether this is temporary or whether redundancies are likely. If you genuinely cannot pay staff and cannot see when you'll be able to, the ethical course is to make redundancies and put the company into appropriate insolvency procedures so employees can access statutory protections through Redundancy Payments Service, rather than stringing them along with false hope while they work unpaid. Many directors avoid redundancies because they hope to avoid the emotional difficulty and final acknowledgment of failure, but keeping staff working without pay is unfair and potentially unlawful. If you're asking whether it's ethical, you probably already know it's highly problematic and need to face whether the business can genuinely be saved or whether you're simply delaying inevitable closure at employees' expense.