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HR Reference Manual

 

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FL Memo

Employee rights on insolvency

Employees are potentially entitled to recover from the state what are described as preferential debts and guarantee debts, when an employer becomes insolvent.

Certain categories of employment are excluded from the right to receive one or both of the above categories of debt.

There is no qualifying period of employment required to become potentially entitled to recover the above debts.

There are a number of types of unpaid monies that are classified as preferential debts and these are amended from time to time by employment legislation.

With regard to guarantee debts, there are certain categories of monies which are potentially eligible for payment from the National Insurance Fund. Again, these vary from time to time as amended by employment legislation. There is a maximum amount per week payable under this heading which again varies based on amendments by the government, normally on an annual basis.

Employees may complain to an Employment Tribunal on any matter concerning the payments made under the above provisions.

It is also possible to reclaim unpaid pension contributions due from an employer who has become insolvent. There are limits on the amount of employers' and employees' contributions that can be recovered, together with associated conditions for the payments to be potentially payable.

Employees who do not receive the payment to which they believe they are entitled may complain to an Employment Tribunal in the normal way.

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