Q. The company I work for is in financial trouble and may have to go into liquidation. If it does, what actually happens and will I get the 3 months' wages I'm owed?
A. The company will cease trading and a liquidator will be appointed to sell off all of the company's assets. From these monies he/she will pay off the company's creditors (of which you would be one) in accordance with the following order of priority:
- The costs of the liquidator.
- Creditors who have taken charges over company assets (such as a bank who has security over a building).
- "Preferential" creditors, which include employees owed up to four months wages (i.e. you).
- Creditors with "floating charges" over company assets.
- Unsecured creditors such as monies owed to the Inland Revenue, trade creditors and any other monies owed to employees.
- Any monies left after the above will be distributed amongst the shareholders of the company.
If there were insufficient funds to pay you, you could in any event make a claim to the Redundancy Payments Office for up to 8 weeks' unpaid wages, capped at the statutory maximum of £380 per week. You can also claim for holiday pay for days not taken up to a maximum of 6 weeks and compensation in lieu of statutory notice. Furthermore, a redundancy payment may be claimed where you have worked for the company for two years or more.
For specialist advice contact Keith Swan of Patterson, Glenton & Stracey Solicitors by email at ks@pgslaw.co.uk or by telephone on 0808 231 7043. Patterson, Glenton & Stracey Solicitors have provided legal advice to the people of South Tyneside for over 125 years. For details of their full range of services and to view previous Gazette articles please log on to www.pgslaw.co.uk . Patterson, Glenton & Stracey Solicitors: Guided by Logic.
