company in administration

paulmx3

if a company has recently gone into aministration and continues being run by a company appointed by the administrators what happens to holiday entitlement earned up until that point.

it has been stipulated that any holiday pay that accrues subsequent to them being instated will be payable but does not stipulate what has happened to the holiday entitlement already earned idead one group have been told that they have lost them.

can someone with knowledge in this field help shed some light on this for me with regards the correct entitlements.

Anihilator

Holiday pay accrued before becomes a creditor and the amount received depends on the administration procees.

paulmx3

Anihilator wrote: »

Holiday pay accrued before becomes a creditor and the amount received depends on the administration procees.

so what happens if the company continues to run as a going concern.surely the legal minimum holiday entitlement must be adhered to.

if they do carry on running the company long term can the holiday entitlement be claimed from the government as with redundancy even though redundancy is not forthcoming?

londondulwich

The company , your employer, is the legal entity which owes you holiday. The individuals which direct it cannot lawfully refuse to pay you holiday you have earned.

These individuals, the directors, may have an additional layer of protection afforded by incorporating themselves as a company, but this does not alter your entitlement to be paid for holidays you have earned.

Holiday pay can be lost if it is not taken within the company's stipulated holiday year.

For some companies this year may start on the 1 of January and end on the 31 of December, for others it may start on the 6 of April 09 and end on the 5 of April 2010.

There is no legal obligation for employers to carry forward holiday earned in one year to bump up the amount of holiday available in the next year.

The usual rule is use it or lose it.

However, sometimes employment contracts are more generous than the statutory minimum and do allow for some or all of it to be carried over.

paulmx3

londondulwich wrote: »

The company , your employer, is the legal entity which owes you holiday. The individuals which direct it cannot lawfully refuse to pay you holiday you have earned.

These individuals, the directors, may have an additional layer of protection afforded by incorporating themselves as a company, but this does not alter your entitlement to be paid for holidays you have earned.

Holiday pay can be lost if it is not taken within the company's stipulated holiday year.

For some companies this year may start on the 1 of January and end on the 31 of December, for others it may start on the 6 of April 09 and end on the 5 of April 2010.

There is no legal obligation for employers to carry forward holiday earned in one year to bump up the amount of holiday available in the next year.

The usual rule is use it or lose it.

However, sometimes employment contracts are more generous than the statutory minimum and do allow for some or all of it to be carried over.

the only thing is they are saying that the holidays whre earned with th compnay that is in aministration and we have lost those because that company cannot pay them and the company that is running them now says only holidays earned while working under them will be payable by them.

for some people that will mean up to a whole year without any holidays.

also if they wont pay them,how do you claim for holidays owed and who from?

The_Pedant

Bottom line is that the administrators, or their employer representatives should be advising you more clearly.

I'm not sure what the case is if the company is simply in administration, and still running to some extent.

If a company is wound up, any outstanding wages/holiday/statutory redundancy can be claimed from the government insolvency service, by completing form 'RP1'. However, as the company is still running, but under administration it is possible that 'the company' is still essentially liable for the unpaid holiday, and will be assessed when the administrators have a clear picture of the accounts and have assessed what creditors are owed. So it could just be time that's needed.

Ultimately, you should get any holiday owed. As it is fast coming up to the end of the year, I would be requesting that the situation over untaken holiday is put in writing so that everyone knows where they are. You wouldn't, after all want to end up at the end of the year to be told that it's lost as it was not taken.

Either way, I would ask for a clearer statement from management/administrators on what the situation is.

londondulwich

It sounds as if the administrators have sold the business to the new company.

I am slightly confused as I understood you to be saying that the administrators are still involved in the running of the company?

If the company has been sold, whether or not your rights to notice, redundancy or holiday will transfer depends on the reason for the sale and what steps the administrators took before deciding to sell.

The position before January of 2009 was that TUPE applied to businesses sold by administrators. TUPE is the legislation which carries things like holiday over to new employers.

After January, in contrast to the guidance issued by the government, the Employment Appeals tribunal decided that if the administrators sold the business immediately, without trying to keep it running then TUPE would not apply. In this situation holiday would not be carried forward.

This decision is controversial not only because it disregards government policy, but because the first duty of an administrator is to try to see if the business can be kept afloat. The second duty is to make sure the people who are owed money by the failing business get as much as possible.

Whether TUPE will apply to you will depend on whether the administrators skipped duty 1 and went directly to selling the business. If they did decide that it was pointless trying to save the business, the reasons for that have to be analysed.

For instance, the administrators have not acting properly if they jumped to step 2 so that they can sell the business on the cheap and be done with everything quickly. They have to be convinced that there is no life left in the old company.

Administrators have to produce a report when they have finished. If you believe that there was something wrong about the way the business was handled by them it might be worth asking for a copy of this report.

Anihilator

londondulwich wrote: »

It sounds as if the administrators have sold the business to the new company.

I am slightly confused as I understood you to be saying that the administrators are still involved in the running of the company?

If the company has been sold, whether or not your rights to notice, redundancy or holiday will transfer depends on the reason for the sale and what steps the administrators took before deciding to sell.

The position before January of 2009 was that TUPE applied to businesses sold by administrators. TUPE is the legislation which carries things like holiday over to new employers.

After January, in contrast to the guidance issued by the government, the Employment Appeals tribunal decided that if the administrators sold the business immediately, without trying to keep it running then TUPE would not apply. In this situation holiday would not be carried forward.

This decision is controversial not only because it disregards government policy, but because the first duty of an administrator is to try to see if the business can be kept afloat. The second duty is to make sure the people who are owed money by the failing business get as much as possible.

Whether TUPE will apply to you will depend on whether the administrators skipped duty 1 and went directly to selling the business. If they did decide that it was pointless trying to save the business, the reasons for that have to be analysed.

For instance, the administrators have not acting properly if they jumped to step 2 so that they can sell the business on the cheap and be done with everything quickly. They have to be convinced that there is no life left in the old company.

Administrators have to produce a report when they have finished. If you believe that there was something wrong about the way the business was handled by them it might be worth asking for a copy of this report.

Don't see where you are getting this.

When administrators a moratarium is introduced on current debts i.e they are in essence frozen and can't be enforced. The administrators then review the situation and decide how to proceed. Where they choose to keep running they are liable to pay costs incurred in this process i.e holiday pay. the pay incurred beforehand though is covered in the moratorium.

Eventually basically (although its far more complex) 1 of 3 things will happen

1) Company is wound up and you claim your stuff from the insolvency cover under government if the employer doesnt have sufficient assets

2) Company is sold in full and you TUPE over with the money being due by the new employer - very unlikely - or more likely part of company is sold and you TUPE over but sstill need to pursue administrators for previous wages

3) Company is somehow saved and moratorium is lifted.

londondulwich

This is a link to the Employment Appeal decision I was referring to:

http://www.employmentappeals.gov.uk/Public/Upload/08_0395rjfhLBDM.doc

If you go to paragraph 19, you can read why the Judge refused to allow TUPE to apply the sale of the failing business by the administrators.

According to this reasoning TUPE will apply if the administrators continue to trade before the sale.

In this instance the administrators decided that there was no point to try and save the business.

This is a link to the guidance from the Secretary of State, which has been ignored by the above decision.

http://www.insolvency.gov.uk/redundancyandinsolvency/mailtupeguidance.doc

The section which talks about when TUPE should apply can be found on the third page under "Administration".

paulmx3

the administrators have appointed a representative company to run things for them while they formulate proposals.also the representing company also seem to be in a great position of no liability whilst getting some good first hand infomation as to which parts of the company they may wish to purchase themselves,which to me seems akin to insider trading.

just seems a very perculiar situaion where on one hand the govement stipulate a minimum holiday alowance yet allow almost a loophole where this apparantly enforced allowance is not enforcable.

government policy makers and the words !!!! and elbow spring to mind.

there are some people on holiday at the moment so will be interesting to see what their pay situation is in the next week or so.

i will agree the communication isnt really great at the moment but i am have to portray second hand infomation accross on here to try and get advice from you people who seem to know about these processes,and for that i thank you kindly.

londondulwich

In that case the scenario I first described applies.

The original company has not been dissolved and sold. It remains as the legal entity which owes you money and it is irrelevent who is directing or controlling the company.

If the directors of the company continue to refuse to pay you, you may wish to ask for their reasons in writing.