How to Claim Wages and Salaries from Your Insolvent Employer
Employment Insurance Act
If you are an employee, then you should be concerned to what should happen to your employment contract should your employer become insolvent as a result of bankruptcy or liquidation. If your employer becomes insolvent, your employment contract will be brought to an end. Wise employees will usually join insurance scheme or policies to cover loss of employment as per Employment Insurance Act. The problem with these policies is that they expect you to find work when you are unemployed and you must accept anything the office suggest. Just because you are a banker today does not mean to say the insurer will cough up until you find another banking job.
Substantial Payments Due To Employees
Insolvent employers usually leave behind a trail of outstanding debts which include substantial payments due to employees. Luckily, employees are granted special protection and status in reclaiming certain outstanding payments. Debts can be recovered from two primary sources: (a) the liquidator, receiver or trustee (b) department of employment.
Loss of Employment is Not the End of the World
Cover Loss of Employment by Insurance
And because loss of employment from insolvent employers will always be there, it is always good to find someone out there who can recommend a decent insurance policy to cover loss of employment in case of your employer's insovency. The problem with these insurance policies is that they expect you to find work when you are unemployed and you must accept anything the office suggest. Just because you are a banker today does not mean to say the insurer will cough up until you find another banking job.
Battle with Ordinary Creditors for Any Balance
Claiming Employment Payments from the liquidator, receiver or trustee is limited up to a certain maximum; otherwise you have to battle with ordinary creditors for any balance. What you can claim include the following:
- 1. All wages and salaries for services rendered during 3 months prior to the date of receiving the order, subject to a certain maximum. These include: guarantee payments, remuneration on suspension on medical grounds, any payment for time off, remuneration under a protective award and statutory sick pay
- 2. Any accrued holiday remuneration.
Redundancy Fund
The bad thing about pursuing a claim against your employer's assets is the delay and furthermore, there may be insufficient assets available to meet your claim in full. Consequently it may be more profitable to submit a claim to the department of employment for payment out of the redundancy fund. Also read Claiming Wages and Salaries from Your Department of Employment.
Decent Insurance Policy
And because loss of employment will always be there, it is always good to find someone out there who can recommend a decent insurance policy to cover loss of employment in case of your employer's insovency. The problem with these insurance policies is that they expect you to find work when you are unemployed and you must accept anything the office suggest. Just because you are a banker today does not mean to say the insurer will cough up until you find another banking job.
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