What Happens To My Employees If My Company Goes Into Liquidation?
If a company goes into liquidation and the employees are owed outstanding money for wages, notice pay and holiday pay, this will be satisfied through claims from the National Insurance Fund, who will then put a claim into the insolvency for the amount that they have paid out to the employees who have put in a claim.
If the company holds sufficient money to satisfy employees claims prior to entering into insolvency, then payments will be made by the company and there will be no need to make application through the National Insurance Fund.
Employees are also entitled to make a claim for redundancy if they have been employed for over 2 years on a full-time basis and have worked in excess of 16 hours per week.
Redundancy payments are also paid out through the National Insurance Fund and a claim is made by the National Insurance Fund to the insolvency practitioner appointed.
There are statutory maximums that employees are allowed to claim per week for any outstanding monies due.
As from 6th April 2018, the limit was raised to £508 per week for claims in relation to arrears of pay, wages in lieu of notice, holiday pay and redundancy.
Generally, if an insolvency practitioner is appointed to assist a company going into administration or liquidation and there are redundancies made, they will inform the employees of their rights and indicate to them how they should proceed to make a claim.
There are statutory maximums in relation to statutory notice pay and you’re entitled to claim 1 week per each full year worked, up to a maximum of 12 weeks.
For redundancy claims, there are maximum limits that maybe made and these are specific to each applicant’s length of service and age, and this calculation will be made by the National Insurance Fund when an application is received.
Length of service for redundancy payments, made through the National Insurance Fund, is capped at 20 years and again is subject to the limit of £508 per week, however, there is an uplift of 1½ weeks’ pay for each full year worked when you are older than 41 years.
Redundancy pay, up to a limit of £30,000, is tax free.