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What does Insolvency mean for employees?

What we are being asked here is what happens to employees if a company goes into Administration or Liquidation, and how do they get paid money that they are due. If a company goes into Administration, it may be possible that the administrators achieve a sale of the business. If this happens, the employees contracts might actually be transferred from the old company to the new and therefore they have continued employment through the purchaser. If this is not possible, then the employees might be made redundant as part of the insolvency process. They therefore might have claims for arrears of pay, redundancy, notice, unpaid pension contributions and other amounts outstanding. These amounts are safeguarded through redundancy payment scheme.

We would work with the employees and the Redundancy Payments Office (RPO) to assist the employees to make claims for the monies that they are owed. The Redundancy Payments Office, having received the information that we send to them, will make payments to the employees directly, up to certain statutory limits. The Redundancy Payments Office will then become the creditor standing in the shoes of the employees. They will then correspond with us with regards to the monies that are due.

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