Employees Rights When Insolvency Strikes
When a Company closes the doors for the last time, the employees receive notice from the Insolvency Practitioner to advise them that they are being made redundant and that they have to complete an ominous redundancy booklet.
The staff may feel betrayed by the directors, who most of the time have formed a personal relationship with the staff, and it all looks like their whole world is crumbling around them. They will be confused about what they are entitled to, when they are entitled to receive it, and what is going to happen next.
In these circumstances, the Employment Rights Act comes into play. Those who have been dismissed can claim through the redundancy payments scheme. Employees are entitled to a payment for arrears of wages (up to a maximum of 8 weeks), holiday pay (up to a maximum of 6 weeks) and pay in lieu of notice. Those with more than 2 years of service are also entitled to compensatory redundancy pay, based on age, length of service and weekly pay, up to a maximum of £430 per week. If an employee is owed more than these statutory limits, they will have a claim in the liquidation and will be paid if realisations permit.
Employees may find the forms to complete confusing, so it is important that they have a point of call to obtain some helpful advice and assistance. It is very important that staff complete the forms correctly to receive their full statutory payment. DCA can help employees complete their forms correctly to ensure that payments are not unnecessarily delayed due to errors. A small mistake on one employee’s form may delay the payment of monies to all of the other staff, so this is particularly important.
On average, employees will receive their redundancy monies about 3 to 4 weeks after their claims are submitted. As a consequence of this, employees may feel some financial strain themselves as a result of the redundancy and this period of time without pay. Employees may benefit from personal insolvency advice; DCA offers no obligation, free of charge consultations, wherein all available options can be discussed.
To arrange an informal meeting, contact Debbie Cockerton on 01702 344558 or take advantage of our “UK Recovery Helpline” which operates 7 days a week, (8am to 8pm) on 0800 066 2544.