Recovery of payments due if an employer becomes insolvent- Goes Bust
If a member’s employer becomes insolvent,the member may unfortunately find himself dismissed, often without notice and due substantial arrears of pay and holiday pay. Themember may also have been dismissed for redundancy reasons and have an entitlement to a redundancy payment. Lastly, the member may have been dismissed atthe same time as many others and may therefore be entitled to claim a“protective award” for a failure by the employers to carry out collective redundancy consultation. This can have a value of up to 13 weeks’pay. Debts that can be recovered from the NIF (NationalInsuranceFund) includethe following:
●Arrears of pay of upto eight weeks.
● Holiday pay of upto six weeks’pay (as long as it has become due in the 12-month period immediately ending with the date of insolvency of the employer)
●Pay for notice of dismissal, or pay in lieu minimum statutory notice required,if no notice was given.
● A redundancy payment if the employee has beendismissedfor reasonsof redundancy.
● Protective awards for failure by the employer toconsult regardingcollectiveredundancies (up to a maximum of eight weeks’ pay when combinedwithotherarrearsofpay).
It should be noted that the Redundancy Payments Office (RPO),who administer the NIF,will deduct basic income tax and nationalinsurance from payments made for arrears of pay or holiday pay.
They will also deduct any debts due by the employee to the Crown (such as other tax) and also any sums due by the member to the insolvent employer. How then should recovery of payments be claimed? If the claim is for sums comfortably within the limits covered by the NIF, a claim need only be made to the RPO.T
hey will consider the claim, liaise with the trustee, receiver, administrator or liquidator appointed to the insolvent employer company, and willthen issue its decision on the claim.
If a member is dissatisfied with the decision by the RPO, a claim to an employment tribunal can be presented within three months of the date of that decision. On the other hand if the claim is for sums in excess of the limits of payments available from the NIF (for example for arrears ofpay of significantlymore than eight weeks) then inaddition to a claim to the RPO) a creditor’s claim form needs to be obtained from the insolvency practitioner appointed for the employers, completed and returned.
Even if no decision is issued regarding the claim, a claim (to include sums not covered by the NIF)mustinthese circumstances be submitted to the Tribunals Office within three months of the date when the payment (or last in a serious of payments) was due to be made. Unite officials will of course behappy to assist members in submitting all claims, including employment tribunals where required.
Unites panal solicertors wwho ever are appointed will assist the Unite member
Dallas McMillan/Thpompsons or Allan Macfdougal solicitors
Some recent settlements formembersin Scotland
●A Ross-shire general operative obtained compensationof£12,000 when a forklift driven by a colleague knocked him over and ran over his foot.
●An Aberdeenshirejoinersecured anout-of-court settlementof £8,000frommildasbestosis contractedinhandlingasbestos whileconstructingofficesfora buildingcompany.Herecoveredan additionalsubstantialsumundera Governmentscheme.
●A Glasgow labourer received £82,500 for serious injuries sustained when a slab of granite fell off a vehicle onto hisf oot.
●An Aberdeen site agent employed for only two weeks was dismisse dafter raising a number of health and safety and construction quality issues with his employers. The claim was presented under Section 100 of the Employment Rights Act 1996,which can allow claims for unfair dismissal to succeed despite the absence of a one year qualifying period of service. Compensation of £6,000 was secured.
●A Perthshire painter obtained a settlement of £6,000 as a result of an unfair dismissal claim. He was dismissed fo ralleged gross misconduct, allegedly havin gbeen involved in a fight with a colleague. The member had in fact simply been assaulted by the colleague.
●A Glasgow-based labourer was dismissed unfairly in the course of a TUPE transfer and received compensation of £11,000.