Understanding Employee Rights in Event of Company Administration Procedure!

Understanding Employee Rights in Event of Company Administration Procedure!

Company administration is a process that’s considered to be an alternative formal insolvency. The process involves engaging a licensed insolvency practitioner, so as to have a clear path for recovery. Also, this is a time restricted process. Expectedly, this means some changes for employees, and in this post, we will talk about company administration and employee rights.

The basics

Once the company has entered administration, the administrator is not required to cover employee contracts within first two weeks, but will ensure that the employees are paid, so as to ensure assistance. The administrator can confirm adopting employee contracts, and after 14 days, the same will be adopted automatically.

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When the business is sold off

Under the TUPE legislation, employee rights are protected in case the business is sold on. The Transfer of Undertakings legislation protects the rights of employees, who have retailed their jobs. The new business that has acquired the company must comply with the terms of employee contracts under TUPE legislations. In simpler words, if you have continued working for the company in administration, your start date for employment remains the same, and the new company will offer a formal notice for the transfer. Please note that new employers are expected to abide the TUPE norms, so if you are asked to get into a new contract with not-so-favourable terms, you can seek legal help for getting your due from company administration procedure.

Things to note

The first 14 days in the process will determine your employee rights. If the administration procedure renders you contract redundant, entitlements before the period will become a preferential. Whenever a company faces insolvency, employees are listed as preferential creditors in the hierarchy of creditors produced. If there are any holders of fixed charges, they will be paid first, but employees will be paid before holders of floating charges. If you are a preferential creditor, you may get up to £800 arrears of pay, pay for holidays accrued, and outstanding pension contributions. It is possible that the business might not have recouped enough from asset sale company administration to pay off the full entitlements of employees. In such cases, claims can be made through the National Insurance Fund. However, those who are self-employed or under an agency cannot get payments from NIF. The National Insurance Fund usually pays off within six weeks of submitting employee rights claims. Claims, as of now, are capped to £489 per week.

Understanding Statutory notice pay

Your company must offer you a legal notice about losing your job, but if you don’t get Statutory notice, you can file for Statutory notice pay. How long you have been working with the company determines the terms. For example, if you have been working for two years or more, you should get two weeks’ notice.

Talk to experts to understand this better.

Categories: Business

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