What happens to my staff in liquidations?
The fate of your staff will depend on the specific type of insolvent procedure you opt for. In insolvency arrangements where the business is allowed to carry on trading, such as administration, your staff may be able to carry on working for you. Redundancies may have to be made, but it is not always the case.
What if the company ceases trading?
If your company ceases trading, your staff will be made redundant and will be able to submit a claim to the Insolvency Practitioners for all of their owed wages, plus any annual leave not taken. On top of this, staff are eligible for redundancy pay equal to one weeks pay for each year they have worked for the company, provided that they have worked for the company for more than 12 months. Redundancy pay is currently capped at £479 per week.
Directors of the company are also eligible for the same owed wages, holiday pay and redundancy pay.
Will my staff get any payout if there is no money left in the company?
Of course, if the company is insolvent, there may not be enough money to cover the full amounts owed, even after assets are realised. Staff wages and holiday pay are classed as preferential debts and will be paid before other debts are considered.
If there is not enough money to pay what is owed to staff, the National Insurance Fund sill pay the redundancy pay and part of the wages owed.