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Have you
recently lost your job due the employer entering receivership, liquidation
or administration?
This can be a real shock to you and we know that many people get very little
help from the receiver or administrator. So read our guide below and or
visit the DTI website at
www.dti.gov.uk/er/redundancy/payments-pl808.htm
If you have any questions the guide or the DTI should answer them, otherwise
email us and we will try to help.
Brief Guide to the Calculation of the Employees Claims in Insolvency:
Employees' rights have been consolidated into the Employment Rights Act 1996
(ERA 96). Together with the insolvency legislation, the ERA 96 provides the
legal framework for establishing employees' rights in insolvency.
Once the total claims (preferential and unsecured claims must be separately
calculated) have been worked out the employees can claim directly from the
Department of Trade and Industry, who then stands in the employees' shoes
and can claim against the company. The purpose is to guarantee minimum
payments to the employees which may not (and often are not) paid out of the
insolvency mechanism as a result of insufficient funds or to avoid
preferences.
All employees claims are calculated as per the guidelines in the legislation
but the actual payments made by the Government are subject to maximum
"capped" payments.
The limit on the amount of a week's pay under the insolvency provisions of
the Act is currently £290 per week, the cap is reviewed annually.
The claims and current statutory limits are as follows:
Arrears of pay:
Most people are paid weekly or monthly in arrears. This claim is limited to
8 weeks at the statutory limit of £290 per week and includes salaries, wages
and sales commissions.
Holiday pay:
Holiday pay is limited to 6 weeks of holiday pay due or a maximum of £800,
in the last 12 months, at the statutory limit of £290 per week.
Payments in lieu of notice:
Under the contract of employment between employer and employee any required
notice amount due from the employer is payable at the statutory limit of
£290 per week.
Redundancy Payments:
Redundancy is where the employer has ceased or intends to cease the
business, or the business in the place where the employee is employed. The
requirements of that business for the employee to carry out his or her
particular kind of work, or to carry out a particular kind of work in the
place of the employee's employment have ceased or diminished, or are
expected to cease or diminish.
Any amount payable is capped at a ceiling of £290 per week. This statutory
redundancy payment is calculated by reference to the following factors
1. Length of the employee's continuous service at the relevant date and
2. The employee's week's pay at the calculation date,
3. The employee's age at the relevant date (if he is aged over 64 it is
subject to reduction) and during his employment.
The maximum number of years to be taken into account for the purposes of
calculating a redundancy payment is 20 and the entitlement is calculated as
follows:
1. One half week's pay for each complete year in which the employee was less
than 22 years old;
2. One week's pay for each complete year in which the employee was less than
41 but not less than 22 years old;
3. One and a half week's pay for each complete year of employment in which
the employee was 41 years old or more.
4. If over 64 years of age the employees claim is reduced by one twelfth for
each month over 64 to a maximum of 65 where there is no payment.
Employees must be able to show two calendar years of continuous employment
at the relevant redundancy date, but any period of continuous employment
before his 18th birthday does not count. Weeks count as weeks of continuous
employment if an employee actually works 16 hours or more or works under a
contract normally involving 16 hours' work or more.
As ever redundancy claims are complex and the brief outline here is not
comprehensive or case specific. Useful guides exist on the DTI's web site
for employees in redundancy
www.dti.gov.uk/er/redundancy/payments-pl808.htm
If your employer is declared insolvent, or cannot or refuses to pay, and you
have done everything you can to get your payment, you can apply to the DTI
for a direct payment from the National Insurance Fund.
But you must have applied in writing to your ex-employer for a payment
within six months of the date your employment ended, or applied successfully
to an employment tribunal within the six months after that.
Please be aware that DTI will seek to mitigate payments to redundant
employees by assuming that they are claiming job seekers allowance. Any pay
received in the period between redundancy and claim payment will generally
be deducted. So it's probably best practice to make those claims anyway to
help relieve financial hardship.
What if I have really serious credit card and loan debts?
Visit our sister site
www.4anewstart.co.uk for detailed help or call our freephone number 0800
1956762, we will be happy to help you.
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