Company in liquidation-will I get wages?

muffy

Got a phonecall last night to say don't come to work tomorrow, as the company is in liquidation. I assumed I would be paid the wages I am owed, but have been told that if there is a pecking order of people that need to be paid before the money runs out and it depends where they are in the list. Given the way the staff were treated when the company was open, I guess we are not a priority.
Can they legally not pay us? Only started work in August and was part time so not entitled to redundancy.

tenchi-fan

The liquidator makes sure everyone gets paid according to the pecking order in accordance with the company act. Employee pay is one of the first things paid out, after taxes.

Basically all the company's assets will be sold off to pay people the company owes money to including stock, buildings, cars, etc.

http://www.formacompany.com/en/ireland/ireland-companies-act-1963/companies-act-1963-sect-285

crabfeet

The liquidators costs are paid before wages.

LegacyUser

I had to look this up for my own situation due to the state of the company im working for. The pecking order seems to be the following:

1 - Revenue
2 -Secured Creditors
3- Staff
4- Unsecured Creditors

Newaglish

Just to be clear on what will actually happen:

In a liquidation, the pecking order is as follows:

1. Costs of Liquidation
2. Fixed Charge Creditors (essentially the bank who owns the property)
3. Preferential Creditors (revenue, employees, council rates - these all rank equally)
4. Floating Charge Creditors (where the bank has a charge over the business itself - this is slightly complicated)
5. Unsecured Creditors (everyone else)

Often, there won't be any money left after 1) and 2) above are paid. Therefore, the Insolvency Payments Scheme was set up to refund employees in this scenario.

If you are owed wages at the date of liquidation, you are entitled to claim for these wages from the Department of Enterprise, Trade and Innovation ("DETI") under the Insolvency Payments Scheme. Provided that you have been paying Class A PRSI, you are entitled to be paid for your outstanding wages from the Social Insurance Fund (pot of money made up of PRSI contributed by everyone).

The liquidator should issue you with an EIP1 form, which he will have completed, and you are to sign this and return it to the liquidator. The liquidator then submits the completed form to the DETI who will issue you with a payment in about 6-8 weeks.

There are limits on what you can claim, as follows:

Wages
Maximum of 8 weeks' wages
Maximum of €600 per week

Holiday Pay
Maximum of 8 weeks' holidays
Maximum of €600 per week
Holidays accrued only for the 18 month period prior to redundancy are included

Minimum Notice
Statutory minimum notice
Maximum of €600 per week
(Given that you started in August you are likely to have less than 13 weeks' service and therefore will not be entitled to pay in lieu of notice)

If you haven't heard from the liquidator, feel free to PM me your details and I can find out who it is and possibly get some contact details for you.

muffy

Newaglish wrote: »

Just to be clear on what will actually happen:

In a liquidation, the pecking order is as follows:

1. Costs of Liquidation
2. Fixed Charge Creditors (essentially the bank who owns the property)
3. Preferential Creditors (revenue, employees, council rates - these all rank equally)
4. Floating Charge Creditors (where the bank has a charge over the business itself - this is slightly complicated)
5. Unsecured Creditors (everyone else)

Often, there won't be any money left after 1) and 2) above are paid. Therefore, the Insolvency Payments Scheme was set up to refund employees in this scenario.

If you are owed wages at the date of liquidation, you are entitled to claim for these wages from the Department of Enterprise, Trade and Innovation ("DETI") under the Insolvency Payments Scheme. Provided that you have been paying Class A PRSI, you are entitled to be paid for your outstanding wages from the Social Insurance Fund (pot of money made up of PRSI contributed by everyone).

The liquidator should issue you with an EIP1 form, which he will have completed, and you are to sign this and return it to the liquidator. The liquidator then submits the completed form to the DETI who will issue you with a payment in about 6-8 weeks.

There are limits on what you can claim, as follows:

Wages
Maximum of 8 weeks' wages
Maximum of €600 per week

Holiday Pay
Maximum of 8 weeks' holidays
Maximum of €600 per week
Holidays accrued only for the 18 month period prior to redundancy are included

Minimum Notice
Statutory minimum notice
Maximum of €600 per week
(Given that you started in August you are likely to have less than 13 weeks' service and therefore will not be entitled to pay in lieu of notice)

If you haven't heard from the liquidator, feel free to PM me your details and I can find out who it is and possibly get some contact details for you.

Thank you for all your replies, good to have this information. I have heard from the liquidator, have to send them back a questionaire with what I am owed.
Good to know there is still a way to get the money if the liquidators cannot give it to me. I'm not owed much in the scale of things but to me it is alot of money!

Thanks again for the replies.

Nikknakk

Hi,

I have just been reading the above thread on an employee who was working for a company which went into liquidation, leaving him owed wages - hopefully someone will be able to help...

My situation is different in that I was owed salary when I left the company (of my own free will) amounting to almost 7k in extra hours, basic salary and unpaid holidays in 2008.

I had to bring the company through the whole labour court process from Right's Commissioner to Employee Appeals Tribunal - my previous employer took full advantage of the waiting periods and then appealed at the last minute at every stage, and even then didn't show up for hearings.

To cut a long story short - his last appeal was denied just over six weeks ago, so from yesterday, I was entitled to get an execution order from the circuit court to get the sheriff to either obtain payment or seize goods. Low and behold, the revenue commissions have applied to have the company wound up due to non payment of tax and vat, which there is a meeting scheduled for next week!! This probably means revenue tried to do the same as me but got nowhere, so now the company is likely to be liquidated.

Does anyone know if the insolvency act applies to me? I know there are certain limits in place - but do I have any chance of getting any of the money back?. I know its a small amount relative to what he probably owes everyone else, but it's a fortune to me! (and a huge overdraft I have been living in since not being paid!!)

Any help would be appreciated as I don't know where to go from here -seems he has also set up a new company and has transferred over his customer list (he is a property management agent) so will probably happily keep on working away, his clients probably dont even realise what he's up to.....

Newaglish

Hi Nikknakk,

Yes, provided you would normally qualify (i.e. Paid Class A PRSI etc. on your income), you will be covered by the Insolvency Payments Scheme if a liquidator is appointed to the company, and they will administer your claim. I wouldn't bother proceeding with the circuit court judgment as it won't get you anywhere (your claim will still be processed by the DETI under the IP scheme).

The only thing you need to worry about is the time limit for claims. As far as I can recall you can go back (from the date of appointment of the liquidator) 4 years for arrears of wages claims and 18 months for holiday pay claims. Minimum notice I can't quite recall.

All in all, you probably won't get your holidays as they're too long ago, but you'll get your wages (max of €600 per week and max 8 weeks to a theoretical max of €4,800).

As a creditor of the company, you'll be entitled to attend the creditors meeting which I think you should do. It's pretty much a formality whereby the creditors can ask some questions (i.e. grill the director(s)) and the liquidator is then appointed. The liquidator will usually appear at the end of the meeting so afterwards I would recommend having a quick chat with him about your entitlements and get the contact details of someone in his office who will be dealing with the case.

Let us know how you get on in the meeting and I can advise after you've spoken to the liquidator.

P.S. 1000th post!

Nikknakk

Hi Newaglish, thanks for your reply - I'll try and find out when the creditor's meeting is and let you know how I go.

Tks!

paublo86

Hello all

Im glad there are people here who share their knowledge to help others like us

I have close the same situation as by EAT I was awarded for certain amount of money for unfair dismissal. The thing is that emplyeer is under liquidation so basicly i have to claim to Insolvency Payments Scheme. Would they repay me all EAT said or just 600e up to 8 weeks as by limit Insolvency Payments Scheme have ?

Please advise as im totaly green in that