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Severance Pay entitlement

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  • 03-09-2019 12:02am
    #1
    Registered Users Posts: 1,228 ✭✭✭


    Hi all - I've been working in this job for about 7 years and it is about to end. Thus I should be due some form of severance pay. About 8000 euro I guess (tax free).

    Except the reason it is about to end is that it seems that the company has grossly "mismanaged" (I can guess how, thus the quotes) the fixed project budget (this is an EU Horizon 2020 project). I'm currently struggling to get my work travel expenses and I haven't yet been paid for the last month. I doubt I'll get the 2 months holiday pay I (unwisely) built up.

    So the company is insolvent with the final demo in 3 weeks.

    But if I'm forced to quit because I'm not being paid, can I assume I can throw that severance pay away? If I don't quit, I get to either starve or claim something called "constructive dismissal". Both options look pretty bad.

    Can an insolvent company pay severance anyway?


Comments

  • Registered Users Posts: 1,228 ✭✭✭carveone


    carveone wrote: »
    Can an insolvent company pay severance anyway?

    I can answer that one myself! The Social Insurance Fund can pay (citizensinformation.ie). This assumes that my employment has been officially terminated though. It's a bit unclear what happens if the employer just stops paying me and walks away (literally - there's no longer an office, I'm working from home!).


  • Registered Users Posts: 4,477 ✭✭✭FishOnABike


    If they're insolvent you would have to join the queue along with all the other creditors. Revenue is at the top of the queue.

    I'd be doing my best to get your expenses, holiday pay due, last months wages and current wages as soon as I could and looking for advance payment for any more expenses. I wouldn't be extending any credit to a company I thought was in danger of going under.

    If the company does go into insolvency you may only get statutory redundancy. You might also be able to claim any pay due (including holiday pay) from Department of Employment Affairs and Social Protection out of the Social Insurance Fund.
    https://www.citizensinformation.ie/en/employment/unemployment_and_redundancy/redundancy/redundancy_payments.html

    I'd advise checking if there are limits to how much can be claimed to reduce your exposure.

    I'd also prioritise getting any expenses due now as there might not be any way to recoup them if the company goes into insolvency. Given the choice between being paid the same sum as expenses or back pay by the company I'd look for it to be allocated against any expenses first, holiday pay, back pay and current pay, in that order to maximise the chances of recouping as much of the loss as I could if the company does fail.

    If the company would be receiving any payment / stage payment following the demo I'd be looking for outstanding expenses, holiday pay and back pay to be paid from that.


  • Registered Users Posts: 1,228 ✭✭✭carveone


    I wouldn't be extending any credit to a company I thought was in danger of going under.

    My brother warned me not to advance them credit but sure, it was only a few hundred quid and they always paid me. Eventually.

    The bizarre thing is that I'd no idea until Revenue froze the company accounts. If anything, I didn't look for another job because: "with the whole Brexit thing causing uncertainty, this is an EU project so I'm certain to get paid until March at least"! Doh!

    Thanks very much for the advice. What I'd like them to do is to let me go as opposed to just ignoring me and hoping I'll go away. Until they do, it's very difficult for me to deal with Social Protection because "i'm still employed". If I quit I'm going to lose money and probably any jobseekers benefit.
    I'd also prioritise getting any expenses due now as there might not be any way to recoup them if the company goes into insolvency.

    This and the list of priorities is a very good point. Funnily I actually have anything that's worth anything sitting in my living room (about €1700 worth) but I'm not stupid enough to try selling it :o
    If the company would be receiving any payment / stage payment following the demo I'd be looking for outstanding expenses, holiday pay and back pay to be paid from that.

    There is a stage payment yes. Not sure how much it is but it'll help to some extent.

    Thanks FishOnABike, that's a great post :P


  • Moderators, Business & Finance Moderators Posts: 10,305 Mod ✭✭✭✭Jim2007


    carveone wrote: »
    The bizarre thing is that I'd no idea until Revenue froze the company accounts.

    The Revenue can't freeze the accounts of a company, just because they think it might be insolvent. There is a lot more to this than you think...


  • Registered Users Posts: 1,228 ✭✭✭carveone


    Jim2007 wrote: »
    The Revenue can't freeze the accounts of a company, just because they think it might be insolvent. There is a lot more to this than you think...

    God knows what they're actually doing! I know they didn't do company tax returns and ignored letters from Revenue about it. I bet that doesn't help.

    People ignore courts, judges, rulings but they generally don't get away with ignoring Revenue!


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