A meeting was held yesterday afternoon to advise which workers would be losing their jobs and which would be employed on temporary contracts.
Managing director Mike Barra said the company had issued redundancy notices to all 28 employees last Thursday, coming into effect today.
Mr Barra said 20 staff would be re-employed on Monday, working on a casual basis to satisfy immediate needs of some customers.
This would be assessed weekly.
"We're sorry that we can't offer those eight even a casual position at this time. It's always been a delicate situation."
In a written statement, Mr Barra said it had been an "extremely difficult" decision and referred to the economic climate in the country and rising production costs.
He was in contact with potential investors who could operate the mill, or parts of it, for their own interests.
"We've been working hard to find a solution to our problems and we're still hoping we can find a solution to move forward."
One company, InsulPro, already operates from the mill and produces NOVAtherm insulation blankets there.
Mr Barra said staff would be paid redundancies despite there being no provision for such in their contracts, and thanked them for being "very loyal".
Clutha Mayor Bryan Cadogan said he was "gutted" for the workers, the company, and the district.
Yesterday, he attended a meeting with mill employees, some major employers, staff from the Ministry of Social Development, and Winz to discuss benefits, taxes and tax breaks, and potential jobs.
"We want to put the support layers in place to provide some certainty."
Mr Cadogan was "heartened" with the response from the employers he had contacted in the district, with some signalling job offers.
"I'm confident that we can absorb these redundancies across the district and alleviate the impact. We have good workers with skills, good work ethic, and good track records."
Mr Cadogan made a plea for other employers in a position to take on mill workers to contact him.
Mr Barra said Mr Cadogan and the Milton community had been very supportive of him and his employees as they worked through the mill's future.
The factory shop was expected to be open for another four months.
The mill has been a major employer in the town since the Bruce Woollen Mill was established 1897.
Milton has a population of 2000.
