Does the Government Provide Support for Employees of Insolvent Companies?
- One huge advantage of working in the UK is the government Redundancy Payments Service
- The Redundancy Payment Service can make payments to employees of insolvent companies to make up losses of employees who have not been paid because of the insolvency of their employer
- Insolvency generally means that the employer has entered a formal insolvency process such as Creditors’ Voluntary Liquidation
- Calculating payments due can be complicated and is specific to an individual’s circumstances; so, we’ll summarise the position
- Possible claims include:
- 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)
- Any payments made by the Redundancy Payment Service will be capped at the statutory maximum levels
- Statutory levels may be lower than the amount that an employee is due under their employment contract
- The statutory maximum payment per week, at the time of writing, is £508 per week for anyone made redundant from the 6th April 2018
- Claim limits are fully detailed on the government website, here’s a link.
- An Insolvency Practitioner will help employees of insolvent companies to make any claims
- In certain circumstances, for example where correct procedure was not followed in giving correct notice by an employer, former employees may have a claim for a protective award
- A protective award must be upheld by the Employment Tribunal Service
- A successful protective award claim can then be applied for payment by the Redundancy Payment Service
- We recommend discussing any possible protective award claim with ACAS the Advisory, Conciliation and Arbitration Service
Many company directors who are shareholders have moved to pay a part of their salary by way of a dividend. Only salary payments will count towards any claim against the government scheme.