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What am I entitled to if my employer goes into administration or liquidates?

Calendar February 15, 2020

In May 2019 last year Jamie Oliver’s restaurant chain collapsed into administration with 1,000 jobs lost. Many of the employees were given no redundancy payments and with some struggling to get by after being given just 30 minutes notice that they were out of a job. KPMG, the companies insolvency practitioner, took control and started the liquidation process

Liquidation is the process of bringing a business to an end and distributing its assets to claimants. It is something that usually occurs when a company is insolvent, meaning it cannot pay its bills and debts when they are due.

The first thing to ascertain when the company goes into liquidation is whether the company is actually insolvent. If it is not, it does not become the responsibility of the government and the statutory redundancy scheme. The employee instead needs to take a case to the employment tribunal and recover the money direct from the employer.

However, if the company is insolvent, as in Jamie Oliver’s case, the employee will be entitled to a statutory payment if they fulfil certain conditions. Any employee with a contract of employment and 2 years of continuous employment will be entitled to a ‘statutory redundancy payment.’ The amount that you are entitled to is dependent on age at dismissal and how long you have worked for your employer. The amount you receive is capped at the maximum amount of £525 per week. The government website has a helpful online calculator:
Below are other payments you can claim if your employer liquidates the company either through an employment tribunal or through the statutory scheme:

Unpaid Wages

The employee can claim compensation for unpaid wages or bonus or commission, up to eight weeks pay (subject to a £525 cap) either from the government scheme or from the employment tribunal if the company is not insolvent.

Notice Pay

This is due to all employees who have been with the company for at least one month, and entitles them to one week’s pay for every complete year of service up to 12 weeks. As with other payments in this scheme if the employer cannot pay and you are claiming through the government scheme there is a cap on payments of £525 a week. If the employer is not insolvent this amount could be more through the employment tribunal process.

Holiday Pay

If the employee is owed up to six weeks holiday pay in the year they became redundant they can claim six weeks compensation from the statutory scheme again with a cap of £525 a week. More can be claimed if going through the employment tribunal route.

Protective award

If 20 or more employees claim that the way that they were made redundant was not done in the right way, that there was a failure to inform and consult the employees, they can claim up to 90 days pay. This is done to punish the employer, rather than to compensate the employee. This can only be claimed through the employment tribunal and not through the statutory scheme.

It is important to be aware that there is a time frame that you need to claim, which is within three months less one day from the date of dismissal.
If you would like more information on what you can claim please get in touch.

Our phone number is: 0330 221 0684


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