Redundancy and bankruptcy

Discussion in 'General Chat' started by OldAndSenile, Jan 30, 2009.

  1. OldAndSenile

    OldAndSenile
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    At the beginning of this week, I was made redundant. I wasn't too concerned as I was unhappy in the job anyway and there still seems to be plenty of demand for my role around, even though loads of people seem to be losing their jobs.

    HOWEVER, it looks a lot like the company (or at least, the director who owns the "limited" part of it) who has made me redundant will go bankrupt before the end of next month, which is when I'm supposed to get my redundancy payout.

    Now, I was counting on the tax-free payout that we had been guaranteed, and it was part of the condition for us accepting the redundancy in the manner we did (i.e. working notice, etc), but if the company goes to pot, what rights do I have with regards to my payout - is it just the government statutory and forget the rest, or do I have some sort of legal entitlement to the full payout as agreed? :lease:

    I've tried speaking to ACAS, but TBH, they've not been much help so far! :rolleyes:
     
  2. fizzi

    fizzi
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    Have a look at

    Redundancy pay : Directgov - Employment

    in particular the bit that says...

    Notice pay
    As well as a redundancy payment, your employer should pay you through your notice period, or payment in lieu of notice depending on your circumstances. Pay in lieu of notice is money paid to you by your employer as an alternative to being given your full notice. Details of the notice period will be in your contract.


    and

    Insolvent employers

    If your employer is declared insolvent or cannot pay your redundancy pay, you can apply for a direct payment from the National Insurance Fund. To do this you must first write to your employer asking for your redundancy pay. If they are still unable to pay you then you should fill out a RP1 form available from the Insolvency Service.

    There are other links to click on from there.
     
  3. unique

    unique
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  4. carling

    carling
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    I worked for a company that went into administration and was told that the rules of insolvency were changed a few years ago to put pay owed to employees first in line, it used to be tax and VAT owed to the government, and was paid all wages and commission owed.

    This is assuming that there is enough money in the company to pay this...

    The phrase "Will go bankrupt" is worrying. If the company is insolvent now then they must declare it now, or lose the protection of limited liability if they carry on trading. If the company isn't insolvent now then how do they know they will be in a months time?

    If it's something they have "planned" and have taken advantage of then they can be sued and be personally liable, limited liability or not.

    But you really need a lawyer or someone to look into the exact details. ACAS were helpful when I claimed constructive dismissal but I'd already seen a lawyer who charged me £100 or so, worth it if there's a few thousand at stake.
     
  5. OldAndSenile

    OldAndSenile
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    Cheers guys.

    It's a very complicated situation and as far as I can tell, the directors have panicked after months of thinking things would just sort themselves out and realised they've got to lighten the wage bill. Trouble is, I don't think they realised that those of us they've made redundant are due 4 weeks notice, plus 2 weeks redundancy, plus all holiday owed. There simply isn't enough money to pay us off and pay everyone else who is still there.

    Part of me hopes they'll sort it all out, but I'm becoming more and more certain that they're just not going to pay us the redundancy then claim bankruptcy when we try and take them to court or call ACAS on them (or whoever it might be).
     
  6. carling

    carling
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    If they fail to realise this and yet carry on trading you might have a case claiming that they traded insolvently, and that would mean they would not be able to hide behind limited liability and you could sue them personally.

    It's a grey area so if you have some serious money at stake consult a lawyer who specialises in this area. If there's a few of you in the same boat maybe split the cost of a consultation?
     
  7. OldAndSenile

    OldAndSenile
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    Trouble is, I don't know if I can afford to sure them without knowing if I'm going to get the money or not - it's a fair whack of cash, but then at the moment I have nothing, as I've got no job, so I need to decide if it's worth the risk! :rolleyes:

    I thought a limited company was limited to the liability of the directors - i.e. if the directors declare bankruptcy of the company they are themselves bankrupt. If this is the case, what good could suing them do when they've already declared they have no money?:lease:
     
  8. unique

    unique
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    a limited company is like a seperate entity. so if it goes bust the liability ends with the company. you can't then sue the director(s) or shareholders for any moeny lost. if it's deemed that those people weren't running the company in a legal manner then they may be made personally bankrupt, but that's usually a rare occurrance as it's difficult to prove
     
  9. carling

    carling
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    As Unique said, Limited Liability means a company can go bankrupt without the Directors and owners being liable for the debt, as long as they followed the rules.

    Imagine if you owned 100 shares in Dixons and they went bust. You are one of the owners of the company. If DSG wasn't a limited liability you, personally, could be chased for the entire debt of the company! (This is the case with ordinary partnerships, each partner is fully liable for the entire debt. If all the other partners do a runner or are broke you would have to pay the lot)

    But if the Directors didn't do their job properly and carried on trading while technically insolvent, or started taking lots of money out of the company, they could have the limited liability protection taken away and then be personally liable. It's tough to prove though.

    If there's a few of you I would defiantly have a whip round and each put in twenty quid or so and see a lawyer. They may not be able to say much more than "You're screwed" but they might be able to do something that could ensure you're paid.
     
  10. Ian J

    Ian J
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    I am a bit confused as to what is actually happening. Is the company going to cease trading as you have previously mentioned that they don't have enough money to pay the redundancy plus the wages to those that are still there, which implies that they are carrying on trading.
     
  11. OldAndSenile

    OldAndSenile
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    They don't have the funds, as far as I am aware. They have, theoretically until the end of February to find/earn the money. I imagine they will cease trading if they can't find the wages, because they'll have little other option?
     

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