Where to begin

Whilst no director wants to see their company fail, if your company is facing insolvency and needs to be liquidated, you must consider the impact that this will have on your employees. Let’s look at what to expect from the liquidation process and how you can do the best for your employees in these difficult circumstances.

How will my employees be affected by the liquidation process?

As soon as a liquidator has been appointed to wind up a company, the entire workforce will be disbanded, meaning that all employees will be dismissed immediately. At this stage your employees can start their claims for redundancy.

Employees redundancy pay

Can the company be held liable for loss suffered by the employees?

In certain circumstances, yes. The company can be held liable should an employee be deemed to have faced significant loss due to the closure of the business, or the dismissal was carried out without the relevant statutory notice being given. An employee can choose to pursue an unfair dismissal claim, and should the claim prove successful, then the monies due will be held against the company as unsecured debt. However, as an employee would be classed as an unsecured creditor, it’s unlikely that the employee would receive some or all of this sum due to the preferential order of the company’s creditors.

What other claims can an employee make?

If an employee has been affected by the company entering into liquidation, then they are legally entitled to claim for any of the following payments:

  • Redundancy
  • Holiday pay (on a pro-rata basis)
  • Unpaid wages
  • Payment in lieu of any notice period

If the company has no money to pay then your employees will be able to make a claim from the Government for redundancy.

Can I receive redundancy payment as a director?

Directors are entitled to a redundancy payment, the same as any other employee, provided that they are actually an employee of the company and have worked there for at least two years, completing a minimum of 16 hours’ work per week in return for a monthly wage. Speak to us today and we can see if you would qualify for a director redundancy claim.

Next steps

If you’re worried about what may happen to your employees should you decide to liquidate your company, we can guide you through the process and help you to do the best for your employees in what is a difficult situation.

Please get in touch and we’ll come back to you
without delay.

Call 0808 506 2246
Text 07717 738 167
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