Redundancy Payments

LegacyUser

Can anyone offer advice on the following?

Scenario: a company goes into liquidation due to financial reasons and the Directors have been made aware of the situation in well advance. And they were aware a time when there was sufficient funds to pay all redundancies.

However the company remained trading, paying staff and using reserves that should have been used for redundancy payments. So therefore the company no longer has sufficient finance to pay statutory payments.

Will the Government be liable to make these redundancy payments, and more importantly, can the Board of Director be held financially responsible for recouping those payments due to their lack of appropriate action to prevent this situation occurring?

Thanks in advance.

Michael D Not Higgins

Hopefully this is what you're looking for.

http://www.citizensinformation.ie/en/employment/unemployment_and_redundancy/redundancy/redundancy_procedures.html

If your employer has not paid your redundancy lump sum, you should apply to your employer for it using form RP 77 (pdf). If your employer still refuses to pay it, you can apply to the Department of Social Protection for direct payment from the Social Insurance Fund. You apply online using form RP50 as follows:

•If your employer is unable to pay your redundancy lump sum, they should sign the RP50 and submit a letter from an accountant or solicitor stating they are unable to pay and accepting liability for the 85% (100% from 1 January 2013) owing to the Social Insurance Fund. Documentary evidence such as audited accounts should also be included.

LegacyUser

Mod: you might wish to delete my previous 2 posts as I may have read Michael D's post incorrectly.


New post is:

Thanks Michael D.

So by filling in the RP50, are the Directors then responsible/liable to pay back the shortfall to the Social Insurnace Fund?

It is a possibility that either by negligence, incompetence or knowing intent, or a bit of all 3, ie: the Directors have allowed the funds to have been spent, thinking that the Social Insurance Fund will cover it. I'd like to think that the government will chase the Directors for this.

I'd also be interested to know if they have breached any Company Law in doing so?

Michael D Not Higgins

I am not a lawyer and don't know the ins and outs of it but the outcome depends on the company's current situation (ie whether they've in receivership, administration, etc.).

The redundancy payments would be owed the SW as a preferential creditor so their debt situation would come into play.

I don't know if there's a law they've broken. They could just as easily say they were expecting the market to pick up.

Michael D Not Higgins

Just double checked and you mentioned liquidation.

The liquidators can charge directors with wrongful trading (UK term, not sure if applicable in Ireland) due to taking it past the point where liquidation was inevitable.

Mrs OBumble

This is the Work and Jobs forum, not the company law one. And besides, we cannot give legal advice anywhere on boards.ie

So please, let's just stick to redundancy rights, and avoid speculation about the directors and what happens if they have not met their legal requirements.

Michael D Not Higgins

Apologies, I meant to add that I can't give legal advice after I mentioned I'm not a lawyer. I just gave the information I came across

LegacyUser

Thanks Michael D.

Without giving too much away, I know what the books look like.

But I guess as MrsOBumble has advised, this is territory that is best dealt with through the appropriate legal channels, if indeed that is where it is headed.

Thanks again.