As an employee of a company that’s going into administration, you may be left in the dark and are unsure about what happens next.
When a company is going into administration it doesn’t necessarily mean that it will close down. The process of going into administration provides breathing space and enables actions to be taken to keep the company up and running, with the possibility of returning back to being profitable again in the future.
But what happens to employees during this period?
You Could Face Termination of Employment
In the administration period, the first 14 days are crucial for employees. If you’re made redundant during this time, you’ll be put into the last category to receive monies owed and will become an ‘ordinary creditor’. You will still retain your entitlement to redundancy payments and outstanding wages.
If you are lucky enough to retain your employment beyond the two-week period, you will become a ‘preferential creditor’. This position is far better to be in should you face redundancy later on.
This is because as a preferential creditor you are entitled to claim:
- Up to a maximum of £800 in outstanding salary and commissions – this covers the four-month period prior to the insolvency
- Accrued holiday pay for up to six weeks
- Some of your occupational pension payments.
Any payments that are owed from before the four-month period will be paid as if you are an ordinary creditor.
So long as you are aware of the amount you are to be paid, you can claim any shortcoming by making a claim via the Insolvency Practitioner and then contact the Redundancy Payments Service (RPS).
This claim is made from the National Insurance Fund.
If you need assistance with this process, contact Irwin Insolvency to see how we can help you.
There are many individuals who save money, budget effectively and build themselves a significant emergency fund. However, plenty of others may not be so prepared and an unexpected event could result in financial disaster.
Debt tends to have a stigma attached to it. Therefore it’s understandable that many don’t want to seek help, especially if bankruptcy seems to be the only viable option.
There are many misconceptions about bankruptcy, so let’s explore the four biggest ones.
- You’ll Lose Your Home
There is little likelihood that your home will be sold to recoup debts that are owed to a creditor. Providing house repayments continue and are met on time, your property is unlikely to be seized in order to cover the debts written off by bankruptcy.
- Filing for Bankruptcy Will Get You Fired
It’s very unethical for an individual to be fired by their boss as a consequence of filing for bankruptcy. In fact, by law, your employer cannot terminate your employment with bankruptcy being the sole reason. Your non-filing spouse’s job will also be protected. Furthermore, potential employers cannot use bankruptcy to discriminate against an individual, although they will be able to see it when considering you for a post.
- All Your Debts Will Be Cleared When Filed Bankrupt
While filing for bankruptcy will eliminate the large majority of debts, there are some forms of debt that are exempt from being wiped. The most common debts that remain in place are student loans, child support obligations and maintenance payments.
- You’ll Be Denied Any Further Credit
While getting further credit will certainly be more difficult, it’s not impossible. An individual can rebuild their credit rating, so long as they are resilient and consistent with payments in the future.
If you’re having financial troubles and bankruptcy is on the cards, it’s best to consult an expert. Irwin Insolvency has extensive expertise in dealing with bankruptcy and will help recommend the best solution for you. Contact us today to discuss your financial situation.