Liquidation/ Redundancy

[laight]

Hi All,

My first post here so not sure how much detail to go into.

Last Monday my husband received a phone call from the director of the company he works for saying he had placed the company into liquidation. No further details were given. It has now been over a week and we have not had anything in writing so I contacted the liquidators. They have told me that they have been approached regarding liquidation but have not yet officially been appointed.

My question is surely he should have had something in writing regarding notice? Is my husband unable to claim any of the redundancy he is owed (13 years worth) until the liquidators have been appointed? Also how long should this process take.

I have a horrible feeling that the dircector is simply stalling in the hope some of payments owed to him will come through but that doesn't help us!

Many Thanks
Laight :tinysmile_grin_t:

[Inca]

Re: Liquidation/ Redundancy

Hi and to LegalBeagles....someone will pop by soon

[Eloise01]

Re: Liquidation/ Redundancy

Hi All,

My first post here so not sure how much detail to go into.

Last Monday my husband received a phone call from the director of the company he works for saying he had placed the company into liquidation. No further details were given. It has now been over a week and we have not had anything in writing so I contacted the liquidators. They have told me that they have been approached regarding liquidation but have not yet officially been appointed.

My question is surely he should have had something in writing regarding notice? Is my husband unable to claim any of the redundancy he is owed (13 years worth) until the liquidators have been appointed? Also how long should this process take.

I have a horrible feeling that the dircector is simply stalling in the hope some of payments owed to him will come through but that doesn't help us!

Many Thanks
Laight :tinysmile_grin_t:

You are able, and should, sign on for benefits immediately - if you do not the amount allowable for benefits would be deducted from payments by the RPO anyway.

Liquidation is not a speedy process, and it could be a long time before you see any money. Whether it be the employer or the liquidator, there is a need to attempt to first (a) maximise any fluid assets etc to obtain money to pay off what is owed to employees (and others - but employees first) because the taxpayers should not be paying if the employer can; and (b) the liquidator may be able to save all or part of the company by selling it, saving all or some of the jobs. It is expected that these options should first be considered before issuing the RP1 to make a claim from government funds. Once the claim is made, it can still be a lengthy wait - I have heard between 3 and 9 weeks quoted even if it is straightforward. In your shoes I would assume not assume less than three months - if it is less then that is a "bonus".

[laight]

Re: Liquidation/ Redundancy

Thanks for that.

Hubby has decided to set up his own business and has already started trading this week so wouldn't be claiming any benefits. In terms of notice would he be entitled to any as he has already secured other work?


Thanks

[Eloise01]

Re: Liquidation/ Redundancy

Ah, b***r. I hadn't thought anyone would be that fast off the mark. He hasn't been given notice - it is very likely he has just blown the lot! He hasn't served notice on his employer (which may, at this stage, have been difficult to do anyway); he hasn't been served notice; and he has not been put at risk yet - in law that is called resigning and you don't get anything for resigning. Please explain exactly what he has done.

[laight]

Re: Liquidation/ Redundancy

ok - took the phone call last week saying the company was in liquidation and there was no more work. Hubby was part way through a job and the contractor agreed that hubby could finish the job on a day rate. Hasn't received any money yet and is unlikely to for possibly 90 days from contractor from when he invoices. He was told last weeks wage was the last he would receive so as far as we are concerned we have no money coming now which is why we were quick off the mark. Please don't tell me he'll get nothing now :tinysmile_cry_t:

[laight]

Re: Liquidation/ Redundancy

Sorry an additional piece of info there were 6 guys working for the company and all of them are now finishing the jobs as hubby is above. Does this mean none of them would be entitled to redundancy.

Is this not a way that the owner can get out of paying redundancy?

[Eloise01]

Re: Liquidation/ Redundancy

Yes it is. More to the point, the RPO can use it too. Assuming that he has not notified HMRC of trading yet, he must stop immediately and go and sign on. Tell them that he had been laid off and why. Lay off without pay, unless it is a contractual term is unlawful (mostly, it's slightly more complicated than that in the building trade at times, but probably not important right here and right now). He tells them that he had been in shock and didn't know what to do, so didn't come in straight away. He gets his claims for benefit in. THEN if he is able to pick up a bit of work, he declares it. It's a bit messy, but his choice is to either sit back on benefits (and he doesn't sound the sort to do that) until this is sorted and he is given notice or otherwise told something definite about his job, or he plays it this way as "I picked up a few days work", declares it and faces having to rejig some benefits a things move on.

If any of them formally become employed, even self employed, before they are given notice, they could lose every penny. Until that company is liquidated or they are made redundant, they are still in employment.

There's a lot more we need to talk about, but the above is his priority for tomorrow.

Then I need to know how long he has worked there. What if anything his contract says about lay off. We'll leave it at that for now, then consider the next step. Oh yes, if he owed any pay from before the lay off. It may be necessary to consider a holding claim to a tribunal very fast, because fees for claims are introduced at the end of the month.

[laight]

Re: Liquidation/ Redundancy

Thanks for that. Have managed to get the owner to say he will write a letter stating employment ceased as of 1st July will this make a difference?

Many thanks in advance

[Eloise01]

Re: Liquidation/ Redundancy

Yes - you didn't mention that before! Regardless of that, since he obtained other employment almost immediately it will impact on any payment he is due from the RPO, and he has probably lost his entitlement to notice pay, although it won't impact on any holidays due, wages due, or redundancy pay. That is in the hands of the RPO, but they would rarely pay out notice pay for someone who has immediately re-entered employment.

[laight]

Re: Liquidation/ Redundancy

That's great thanks. Let's just hope he sticks to his word now :-). Really appreciate your help on this.

[Eloise01]

Re: Liquidation/ Redundancy

Ah - you haven't actually got the letter? You need that letter in your hand. Or you need to take my advice. One or the other. The risk here is that if he doesn't write it and the guys carry on working, they will lose the entitlement. It's their word against his that it isn't just a lay off.

[FlamingParrot]

Re: Liquidation/ Redundancy

From experience in a similar situation, when a company I know of went into liquidation, everyone was handed out a form pack from the Insolvency Service to claim for redundancy, notice period and unpaid wages. The forms were returned to the liquidators who were there to assess whether payments could be made from company assets, as this wasn't the case, they were forwarded on to the IS. The outcome was the following:

• Redundancy: The IS paid redundancies at the statutory rate to everyone who had been employed 2 years or longer.
• Notice periods: It was stated as a week's notice per year of service, up to 12 years, regardless of any contractual stipulations. Anyone employed 3 months to 3 years, would have had 4 weeks notice on their contract, but this was disregarded as the contract was said to have ceased to exist. Any income during the notice period, whether from work or benefits, had to be declared and was deducted from the overall entitlement. The IS notes said any benefits you may be entitled to, such as JSA, should be claimed as soon as possible to minimize your loss. It implied if you didn't claim it, JSA would still be deducted.
• Unpaid wages, holiday pay and overtime. Any unpaid wages, holidays and O/T were paid for by the IS upon confirmation of days/hours worked and not previously paid, via the liquidators.

The process was rather painless as it was all done by the liquidators and they were always there to help. Payments for the categories above were made separately, some took longer than others, I'd say payments were made within 6-12 weeks.

[FlamingParrot]

Re: Liquidation/ Redundancy

Sorry an additional piece of info there were 6 guys working for the company and all of them are now finishing the jobs as hubby is above. Does this mean none of them would be entitled to redundancy.

Is this not a way that the owner can get out of paying redundancy?

It is, but the Insolvency Service will pay it instead.

[Eloise01]

Re: Liquidation/ Redundancy

It is, but the Insolvency Service will pay it instead.

Just to clarify - as I said, it is also a get out clause for the RPO, which is why the OP needs to be careful here. The company is not currently in liquidation. The staff have not been given any notice and currently have no written termination of contracts. Therefore it is very arguable in law that they have resigned their positions by taking up other employment without either of these things. Suppose the liquidator, when appointed, sells the company intact? The jobs are therefore saved and the employees have, in effect, "buggered off"! Until there is firm evidence that something has happened, the situation is the status quo - the employees have jobs and the issue at hand is faliure to provide work / unpaid wages. The RPO will only step in if there is a liquidation - otherwise it is a matter for other legal remedies.

I have come across this situation where employees fall "between two stools" on many occasions. They are neither qualifying for statutory support from the RPO because the employer does not liquidate, and they cannot obtain payment from the employer because they refuse to pay. The only remedy to eventually kick in payment from the RPO in such circumstances is to make a tribunal claim - but in the next few weeks that will cost them money to do. Even assuming that they won such a claim or obtained a default judgement, the RPO will quite certainly not pick up the tab for the costs of the claim - what they may and may not pick up is very proscribed.

So obtaining that letter confirming that they have been dismissed as redundant is very important. It may be that the employer is simply taking time to get around to things - but it could be a very costly mistake to assume that to be the case.