Advice on insolvency payments please

An aquaitance worked for a company that is now in administration.

All across the uk in their field were told yesterday they won't be paid for January and to claim, other staff will be paid, some on garden leave pending any sale to a buyer.

Is this allowed?

Also if someone had enhanced notice (3 mos contractually) but standard notice is less due to service which is honoured via insolvency practitioners?

Is pay in lieu and accrued holidays at the capped rate?

Lastly - they have a lot of expenses on credit card for fuel, trains, flights etc - I take it they need to sue for this and insolvency won't pay this?

Any help is much appreciated as they can't get any benevits like tax credits as year to date is too high so money is an issue right now.

Replies

  • As the company is in administration the employees can make a claim to the National Insurance Fund. There are limitations on the payments that can be claimed, and anything still remaining unpaid would have to be notified to the insolvency practitioner, but notice pay, redundancy pay, holiday pay, and wages owed (with limits) can be claimed

    See here for more info

    https://www.gov.uk/your-rights-if-your-employer-is-insolvent/claiming-money-owed-to-you
    I'm a retired employment solicitor. Hopefully some of my comments might be useful, but they are only my opinion and not intended as legal advice.
  • Thank you

    Is it unlawful they are paying others and on garden leave whilst not paying others for January?

    Can they claim their expenses via insolvency or only if money's are in company?
  • Johno100Johno100 Forumite
    5.3K Posts
    Tenth Anniversary 1,000 Posts Name Dropper
    Thank you

    Is it unlawful they are paying others and on garden leave whilst not paying others for January?

    No, the Administrators have a wide discretion over who they keep on and who they let go. They need to prune the dead wood if they are going to make the business attractive to a potential buyer.
  • Thank you

    Is it unlawful they are paying others and on garden leave whilst not paying others for January?

    Can they claim their expenses via insolvency or only if money's are in company?


    When you say they are not paying people for January, I understood you to mean that they had terminated those people's contracts (ie made them redundant) owing them January's wages? Those people need to make a claim to the national insurance fund.

    Is it unlawful to treat people in this way? Probably. What are they going to do about it? Not a lot, the company is insolvent, that's what the NI Fund is for.

    I don't really understand your second question, sorry. The company is in administration. It is insolvent, so any debts must me notified to the insolvency practitioner, but in reality most people won't get their money back, or only a tiny proportion of it.

    It is a horrible time for employees caught up in a business that has gone down, but the company does not have enough assets to meet its debts, which is why an insolvency practitioner has been appointed. The administrators may try to keep the business trading in order to try and sell it on as a going concern, but there will be casualties, and they may have to write some of the money off.
    I'm a retired employment solicitor. Hopefully some of my comments might be useful, but they are only my opinion and not intended as legal advice.
  • Thank you - they got a pack explaining it all and also have a new job. I think it was the lack of info that caused the panic.
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