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