Employer Insolvent

[dsm2304]

Last month my employer failed to pay me in full, balance was eventually received along with an explanation. My employer has been trading with income failing to cover expenses for months now. The end of January was the crisis point as HMRC were due payment as well as employees.I was one of four employees to be part paid, there are a further 3 employees who were paid in full but kept in the dark as to the circumstances confronting the business.

My employer has begun the redundancy process and I suspect I and my colleagues, all 7 of us, are going to lose our jobs.

My concern is over receiving payments due for the current month, redundancy pay, expenses, holiday entitlements and pay in lieu of notice. I have been in touch with the CAB and have learnt of the existence of the National Insurance Fund which has given me a degree of peace of mind.

As an employee knowing of the situation can I petition for my employer to be wound up?

I appreciate this is extreme but from what he has told me his business is holed below the water line and in an irrecoverable predicament. Forcing the issue would to my mind eliminate the degree of uncertainty that has been hanging over my colleagues and myself for the past month as well as hopefully invoking the safety net that is provided by the National Insurance Fund.

Would raising a claim through the employment service under section 13 employment rights act for unlawful deduction of wages initiate such a process anyway or is it a separate action?

[FlamingParrot]

Re: Employer Insolvent

Welcome aboard

Last month my employer failed to pay me in full, balance was eventually received along with an explanation. My employer has been trading with income failing to cover expenses for months now. The end of January was the crisis point as HMRC were due payment as well as employees.I was one of four employees to be part paid, there are a further 3 employees who were paid in full but kept in the dark as to the circumstances confronting the business.

My employer has begun the redundancy process and I suspect I and my colleagues, all 7 of us, are going to lose our jobs.

My concern is over receiving payments due for the current month, redundancy pay, expenses, holiday entitlements and pay in lieu of notice. I have been in touch with the CAB and have learnt of the existence of the National Insurance Fund which has given me a degree of peace of mind.

As an employee knowing of the situation can I petition for my employer to be wound up?

You don't need to do that to have access to the fund in question. If a company goes into liquidation, you can claim any moneys due to you from the Insolvency Service. This includes unpaid wages, holiday pay, statutory redundancy pay and notice period. It should be noted that IS payments are capped at around £460 a week and you'd only get statutory redundancy pay. Some employers have more generous redundancy packages but this contractual obligation wouldn't be honoured by the IS. Statutory redundancy pay is calculated as a week's pay for every year of employment you were between 22 and 40, week and a half for every year you were over 41. You need to have been with your employer for at least two years to qualify.

You'd also get notice period payments but only a week's pay for every year of service rather than whatever your contract states. Most contracts require four weeks notice, some up to twelve weeks (mostly for management positions), the IS will not honour those contractual periods. The notice period payment is subject to deductions if you find alternative employment and you will be expected to 'mitigate your loss' by any means, including claiming JSA, so you may not get the full amount.

The IS forms are normally handled by the liquidators who have a duty to ensure the company has no funds to make those payments before forwarding them to the IS, this means you may have to wait a few months before getting your money, also there are separate claims for redundancy pay, notice period and unpaid wages/holiday pay, etc. so you may not get it all payments at the same time.

The IS publishes a useful factsheet: https://www.gov.uk/government/upload...fact_sheet.pdf

I appreciate this is extreme but from what he has told me his business is holed below the water line and in an irrecoverable predicament. Forcing the issue would to my mind eliminate the degree of uncertainty that has been hanging over my colleagues and myself for the past month as well as hopefully invoking the safety net that is provided by the National Insurance Fund.

Trading while insolvent is a criminal offence, so your employer will have to put the company into liquidation if they are in financial difficulties.

[dsm2304]

Re: Employer Insolvent

Dear Flaming Parrot,

Thanks for clarifying a few things for me. My contract stipulates a 3 month notice period so I am probably best advised to try and get this from my employer rather than relying on the NIF.

My employer has been given advice by his accountants so I am assuming he is not yet insolvent as I would guess they would have to advise him as to the legal position of trading whilst insolvent.

I will provide an update once things have become clearer.

[FlamingParrot]

Re: Employer Insolvent

Dear Flaming Parrot,

Thanks for clarifying a few things for me. My contract stipulates a 3 month notice period so I am probably best advised to try and get this from my employer rather than relying on the NIF.

It certainly would be good if you could, the IS will only pay a week per year of service for notice period and even that, not always in full, the claim form says that you should mitigate your loss, for example, by claiming JSA, so it's possible that they will deduct the standard JSA rate from any payment.

How long have you worked there?

My employer has been given advice by his accountants so I am assuming he is not yet insolvent as I would guess they would have to advise him as to the legal position of trading whilst insolvent.

I will provide an update once things have become clearer.

Yes, they would.

Do post up when you hear something else. :typing: