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Ben Jones
Ben Jones, UK Lawyer
Category: Law
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Experience:  Qualified Solicitor - Please start your question with 'For Ben Jones'
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My previous company (of which I was a director) is close to

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My previous company (of which I was a director) is close to wind up, owing me approximately £12,000 in back paid salary. I left the company 12 months ago and it has been continuing to trade in my absence. I also resigned as a director when I left the business.
If the company goes into liquidation, am I entitled to any compensation? The company has minimal assets.
Submitted: 1 year ago.
Category: Law
Expert:  Ben Jones replied 1 year ago.
Hello, my name is***** am a qualified solicitor and it is my pleasure to assist you with your question today. Are you owed the money as salary arising out of you being their employee, or was it accrued via other means?
Customer: replied 1 year ago.
For Ben JonesHi Ben, it was money accrued out of me being paid as an employee under PAYE.
Expert:  Ben Jones replied 1 year ago.
If this is salary owed under PAYE then it will be an unsecured debt and will rank in specific priority when the debts of the company are being resolved. The liquidator will have a duty to realise the funds an assets of the company and pay off any creditors. There are several levels of creditors and each group must be paid out in full before they move on to the next one. As an unsecured creditor you will unfortunately rank quite low and if you get anything back will depend on what debts there are above you and the available assets which can be used to pay these off. If the company does not have enough funds to satisfy your claim, you could instead make a claim with the Government’s National insurance Fund, which can cover some or all of these. This is your basic legal position. I have more detailed advice for you in terms of what is covered and how you can claim from the fund, which I wish to discuss so please take a second to leave a positive rating for the service so far (by selecting 3, 4 or 5 stars) and I can continue with that and answer any further questions you may have. Don’t worry, leaving a rating will not close the question and we can continue this discussion. Thank you
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Customer: replied 1 year ago.
For Ben JonesHi Ben, what if I went to court and won a CCJ against the business how would that rank in the priority list?I think the main focus will be claiming from the NIF, does the company have to be insolvent for that process to start?ThanksPaul
Expert:  Ben Jones replied 1 year ago.
Thanks for the rating. If an employer becomes insolvent, an employee can issue and pursue legal proceedings against them for any money owed. Whether it is worthwhile suing an insolvent employer is another matter and very much depends on the status of the company and what, if any, money and assets they have left. In most cases, pursuing legal action against the company would be pointless as they are unlikely to be able to satisfy any court judgment against them. The first step would be to contact the company’s insolvency practitioners (administrator, liquidator, etc.) to check if it is likely for any money or assets to become available for distribution amongst the company's creditors, including their employees. 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(###) ###-#### ***** you won a CCJ you would still only be an unsecured creditor so it won’t change anything. To claim from the NIF the company must have been declared insolvent.

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