Can I Use My Redundancy Money to Pay for a Voluntary Liquidation?
- Claims for unpaid amounts can be made by the Redundancy Payments Service if any employer is insolvent and doesn’t pay what’s due.
- A formal insolvency process is usually needed, such as insolvent company liquidation
- Claims could be across four areas of payments not made by a company:
- Holiday pay
- Pay to replace the warning period of redundancy, that should have been given – known as notice pay
- Redundancy (requires two years employment for that employer)
- If an employee is also a shareholder, then it’s possible that some of their payments for working in a company have been dividends and not PAYE salary
- Claims by an employee will only be made for income paid as PAYE salary
- Redundancy is only available for employees that have worked for a company for more than two years
- It’s quite possible that a claim for redundancy could be used to pay for the costs of voluntary liquidation. A formal insolvency is usually needed before a claim can be made
- Payments from the government usually take around six weeks and possibly longer for payments for a notice pay claim
- To use redundancy to pay for or to top company money is quite possible
- An agreement will need to be put in place to guarantee that once payments have been received from the Redundancy Payment Service that they will be paid over the company liquidator
Always be clear on what you may be asked to sign by a liquidator. Be clear that what you are agreeing to pay is clear and agreed. An open-ended agreement with no financial cap could be very costly for anyone that signs up to one.