Claiming unpaid wages (company going into administration)

[Olga81]

Advised recently that company likely to be going into administration and December wages would not be paid.

For what time period can unpaid wages be claimed? Up to the point we worked, or up to the point the company officially goes into administration?

[topcat2014]

Which is later? After a company is in administration, the administrators (who will be accountants) will have assumed personal responsibility for paying any wages since their appointment

[Olga81]

Have been sent home from work as they cannot pay us but the company has not appointed administrators yet, so date I have worked until is earlier than administration date.

[hidingmystatus]

TopCat is wrong. The administrators will not be personally liable, nor will their firm, unless there are some extremely unusual circumstances. Wages of any employees kept on post-administration come from the funds/assets in the insolvent company.
YouGov has some very useful and accurate information, OP. Search it for "employee rights on insolvency" or something like that. It's the first answer that Google gives me.

[Olga81]

I've not found any clear information on the government sites.

I understand that if the company had gone into administration and we'd been sent home we'd have rights to claim back unpaid wages (or at least a proportion)

However the company I work for has not yet gone into administration but nobody in the company is attending work ( as we are not being paid). Yet we are not officially redundant. I cannot find out what lost wages if any would be available for this period.

[annandale]

Try ACAS helpline?

[Olga81]

The helpline was unhelpful!

I already know it's likely I'll lose money as my weekly pay is higher than the maximum claimable and haven't been paid the entire month of December. Just trying to do the sums to work out a budget for the next months. I guess I could work on the assumption that nothing more will be paid then anything is extra

[daisychain01]

You need to get an official position from the company. If necessary seek proper legal advice They can't just vaguely state they "might be" going into administration without some formal statement and arbitrarily cease paying employee wages. That's breach of contract. Let's face it anyone could pull a stunt like that.

Are you certain they have stopped your Dec wages?

[Olga81]

A notice of intention has been filed. So not just a vague statement

[daisychain01]

Can you get a group of your colleagues together and get legal advice for you all as it will be more affordable that way

[topcat2014]

@hiding - ok, I bow to your superior knowledge - not my specific branch of accountancy.

I have only seen letters from companies "after" appointment of administrators that do say they are liable, or at least to a certain extent.

I wouldn't expect administrators to pick up the tab for anything before their appointment.

Good luck, anyway, OP

[Jerseysilkvelour]

I deal with this sort of issue professionally.

At the moment you are a creditor of the company, they are liable for your wages. So until an administrator or liquidator is appointed they owe you your wages.

Once the company is in formal insolvency proceedings (appointment of liquidator or administrator, you become a creditor in the proceedings.

You become a preferential creditor for your wages, meaning that when a dividend is declared, you get paid first.

In the mean time, You can claim from the redundancy payment service (RPS, part of the Insolvency Service), the Administrators should give you the appropriate forms and make the claim for you. You can approach them and explain the situation to see if you can claim now. Your claim from them is limited though and might not be the full amount you are owed.

Once they have paid you, the RPS become a creditor in the Insolvency proceedings and your preferential claim will then be for what you are owed now less what RPS have paid you.

Hope that helps!

[Olga81]

Meeting with colleagues next week.

Likely other aspects will become clearer then anyway, i.e. business will go into administration , I'm just trying to do some financial planning ahead of that.

[Olga81]

Thanks for that Jerseysilkvelour but I'm still not clear on what period I can claim unpaid wages for. I have been reminded that our employment contracts still stand and if we pursue other work that will be resignation not redundancy. I will not be eligible for redundancy so 'leaving' for another job might be better for me if payment is only due for work done, not for the entirety of the employment contract up to the point of redundancy. If it is the latter, I have a little more breathing space before I need to find another job which would be helpful.

[Jerseysilkvelour]

The administrator will make you redundant. You can claim for whatever you're owed until that point. The administrator should be appointed in the next few days of they have already filed the notice to appoint, probably a creditor will appoint one ASAP to protect their position so it's worth holding on until then.

If the administrator wants to trade the business on (which i would question as they've sent you Home so how is it functioning now? Every day lost means lost value.) you may remain employed in the administration for a while.

www.gov.uk/your-rights-if-your-employer-is-insolvent

[topcat2014]

@Olga81 - what are your hours / standard shifts etc.

Whilst you may not be entitled to redundancy, owing to length of service etc - you can't lose entitlement for hours that you have already worked.

[Jerseysilkvelour]

From what you said, they have closed the company (that's the effect of sending everyone home!) so you'd be able to claim for whatever you're owed until then, plus holiday owing and pay in lieu of notice, and statutory redundancy if you've worked there long enough. I think it is worth your while to wait for the appointment of administrator (or maybe liquidator as the business has effectively closed) as it will only be a few days.

[Olga81]

Thanks I'll just hold on for a little longer. It's all a bit cloak and dagger at the moment and it's this bit I'm struggling with. If I could just throw myself into finding new employment it would be easier to cope. But sitting around doing nothing whilst knowing it's likely you won't have a job next week is difficult.

[Jerseysilkvelour]

It's a horrible situation I've seen too many times and I feel for you. Cloak and dagger is about right in these sorts of things.

Another question to ask is whether they have paid your NI and PAYE over to HMRC as this can affect your state pension/ benefit entitlement. I'll bet money they're in arrears with it and there may be considerable gaps in your record. HMRC don't always credit you with the NI just because your employer didn't pay anymore.

[Olga81]

A colleague is already trying to find out about the NI. We know that pension contributions have not been paid in for at least 2 months.

[Olga81]

With PAYE if I can see the deductions made on my last payslip recorded against my record on HMRC site, does that mean they've actually been paid?

[RB68]

Deductions may not have been paid which would make HMRC a creditor as well and long term you would be liable potentially (for those where you are responsible but company pays on yr behalf so tax and NI)

I would focus on getting yourself another job the shitstorm from going into admin takes and aeon to sort out and you are unlikely to see any money for some months

[RB68]

For NI its done on a 3mthly cycle but at the end of that cycle you would be able to see if that has been paid - phone and ask

[RB68]

As for the job hunting just go for it don't put it off - if nothing else you are just looking for a better opportunity -no need to divulge anything else to be honest

[Olga81]

long term you would be liable potentially (for those where you are responsible but company pays on yr behalf so tax and NI)

Yikes, that would potentially make the situation a lot more serious for me.

[Olga81]

Well officially unemployed as of today. Wages will be paid up to end of employment, i.e. yesterday, plus some pay in lieu of notice and some holiday pay. Although unlikely to get everything back over and above the statutory which will need to be claimed as a creditor.

Thanks for the reassurance.

As an aside, does anyone know how long before it's officially published that the company is in administration?