What does insolvency mean employees? In the first instance the insolvency practitioner will need to
make the employees aware that he has been appointed, it doesn’t mean that
their employment immediately ceases upon his appointment within administration
for instance the administrator can continue to trade the business. If he’s
unable to sell the businesses are going concern then he may need to make some
redundancies and if he’s unable to sell the business at all then possibly the
whole workforce will ultimately be made redundant. The employees enjoy a
preferential status within the insolvency process generally in that if
there are arrears of wages or holiday pay then they rank above other creditors
so they get paid first from the proceeds of asset sales. Over and above that the government has introduced legislation called the Redundancy Payment Act
whereby the government will underwrite the amounts due to employees and pay
them up to certain limits for arrears of wages, holiday pay and
redundancy and there’s a set forms to fill in to be able to claim those
monies and government department examine those forms and makes payment direct
back out to those employees and then it seeks to get those payments back from
the company as from the insolvency in due cource.