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Ben Jones
Ben Jones, UK Lawyer
Category: Law
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I Was a Director/Employed under contract to a Company. Although

Customer Question

I Was a Director/Employed under contract to a Company. Although on the payroll l was unable to take wages and was relying on the sale of assets to be paid. This was not achieved before the company went into administration. The company under administration has since sold all the assets and has enough funds to repay all the creditors.

Can l now make a claim for wages, redundancy pay, expenses.

Stuart
Submitted: 3 years ago.
Category: Law
Expert:  Ben Jones replied 3 years ago.

Ben Jones :

Hello, my name is XXXXX XXXXX it is my pleasure to assist you with your question today.

Ben Jones :

How long have you worked there for?

Customer:

20 years

Ben Jones :

Who is dealing with these funds - are there administrators in charge?

Customer:

yes but now is in voluntary liquidation

Ben Jones :

Did you have a specific salary?

Customer:

Salary l was drawing up to when l stopped taking wages was £300 per week.

Ben Jones :

When did you stop getting paid?

Customer:

Wages not drawn since October 2012.

Ben Jones :

have you contacted the people dealing with this to see what is happening with the wages you are owed?

Customer:

I have already explained l did not draw any wages from October 2012 although on the payroll. What l am trying to establish is whether l can now make a claim. Up to now l have not made a claim.

Ben Jones :

yes I understand but is there someone dealing with the liquidation, such as an insolvency practitioner?

Customer:

yes

Ben Jones :

ok an have you contacted them yet?

Customer:

I am in constant contact with them because being the last remaining director have had to provide information. . But upto now have not made a claim for wages.

Ben Jones :

ok let me get my response ready please

Ben Jones :

Assuming that you had a contract of employment and were paid wages by the company, you would be able to claim for any unpaid time you have worked until the company stopped operating. As an employee you would be a creditor of the company and will be entitled to a share of the proceeds of any sale of assets/goodwill. However, there is a strict order of priority on who gets paid first and you will have a set place in that queue. If those above you are paid out first, using up all the money, then you will not be able to claim from the company and must pursue your debts elsewhere, such as through the Government, which I will explain below.


 


The order of priority of debts is as follows:



  • Debts secured by fixed security

  • Expenses of winding up

  • Preferential debts

  • Debts secured by floating charges

  • Unsecured debts


 


Part of your debts will be ranked as preferential debts, the rest will be unsecured debts and be the lowest ranking. Preferential debts will be your wages owed for the 4 month period before the start of the insolvency proceedings, with a cap of £800 in total. The rest, like redundancy, other pay owed, etc will be an unsecured debt.


 


You can contact the insolvency practitioners to tell them you wish to claim for any debts you are owed and they will deal with this as it is their job to realise the assets and pay the creditors, like you.


 


If it appears unlikely that the company will be able to cover these payments, employees will also have additional rights to claim through the National Insurance Fund (NIF). The following debts, if owed to employees by an insolvent employer, can be recovered from the NIF:


• Up to 8 weeks' arrears of pay (up to the current maximum statutory limit on a week's pay) less basic rate tax and NI contributions.


• Up to 6 weeks' holiday pay (up to the current maximum statutory limit on a week's pay) which accrued in the 12 month period ending on the date of the insolvency, less basic rate tax and NI contributions.


• Statutory notice pay (up to the current maximum statutory limit on a week's pay) less basic rate tax.


• Statutory redundancy payment less any amount already paid by the employer


 


Any claims in excess of the above limits should be claimed from the insolvent employer in the usual way, such as through the insolvency practitioner or through court.


 


To be able to claim from the NIF, the following conditions must be met:


• Only employees can claim, therefore the self-employed, agency workers, etc are not covered


• The employer must have been made officially insolvent


• The employee’s employment must have been terminated


 


Assuming the above criteria have been met, the procedure for claiming requires the application to be made to the Redundancy Payment Office responsible for the employer’s area, by using form RP1. To get a copy of the form and for further details, you can contact the Redundancy Payments Helpline on 0845(NNN) NNN-NNNN

Customer:

Just to confirm, Providing l had a contract of employment regardless of whether l drew any wages for the 9 months preceeding administration l can make a claim with the liquidator even if l might not for whatever reason qualify for a claim from the NIF.

Ben Jones :

yes, the first step is to claim from the liquidator - they will consider your circumstance and decide on what you are entitled to and deal with this, as mentioned it is their job to pay the creditors of the company so they will be expected to deal with your claim

Customer:

Many thanks.

Ben Jones :

You are most welcome. Please take a second to leave a positive rating for the advice I have provided as that is an important part of our process. Thank you and feel free to bookmark my profile for future help:



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Customer: replied 3 years ago.

Hello Ben Jones,


 


Did you give me the correct information yesterday. Is there not a time limitation for making a claim. Company went into Admin 27th June 2013.


Stopped trading. Just gone into Voluntary liquidation. I read somewhere you only have 6 months to make a claim from the NIF. Not sure about time limitation with the administrator or now the liquidator (same company).



Rgds



Stuart


Expert:  Ben Jones replied 3 years ago.
Hi, there is no specified time limit for claiming from the NIF but it may be affected by the general rules on time limits for claiming. Generally, an employee will lose their right to a statutory redundancy payment unless one of the following four events occurs within the six-month period beginning with the date they were made redundant:
A) The payment is agreed and paid by the employer.
B) The employee makes a written claim for payment to the employer.
C) The employee's right to a redundancy payment is referred to an employment tribunal.
D) The employee presents a claim of unfair dismissal to an employment tribunal.

Once an employee has established their right to claim as per the above rules then there is no time limit on making a formal claim, including one to the NIF. But if you have not been able to do any of the above and the 6 month time limit from the date of redundancy has passed then you may not be able to claim from the NIF. no harm in contacting them and even submitting a claim, the worst that could happen is it gets rejected
Customer: replied 3 years ago.

FOR Ben Jones

 

Thanks for that one final question does the six month period apply to a claim to the administrator/liquidator.

Expert:  Ben Jones replied 3 years ago.
you can claim from them at any point but if they refuse to pay you, then the time limit on pursuing this would still apply, so yes the time limit will eventually apply, but only if you have to pursue them through the tribunal

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