Empey clarifies redundancy and insolvency payments guidelines

In the wake of recent high profile business closures Employment Minister Sir Reg Empey, today clarified his Department’s redundancy and insolvency guidelines.

Sir Reg said: “Recent cases of companies going into administration have led to much comment in the press as to entitlements of employees who are made redundant in these circumstances. The Department for Employment and Learning is responsible for implementing Articles 201 and 227 of the Employments Rights Order 1996. This empowers the Department to pay redundancy pay, arrears of wages, holiday pay and pay in lieu of notice to those employees who are made redundant as a result of their company going into administration and where the company records can be verified as to their entitlement to these payments.”

The key aspects of entitlement to these payments are;

Redundancy pay – employees have been employed for a minimum of two years but in general self-employed persons and sub-contractors are excluded. Entitlement under the scheme varies with the employee’s age, number of complete years of service and weekly rate of pay.

Arrears of pay - this is based on amounts owed for each week or part week. This is limited to a maximum of eight weeks payment.

Holiday pay - this is based on holiday pay owed for the 12 months before the company went into administration. This is limited to a maximum of six weeks payment.

Notice pay - this is based on length of service and rate of pay. This is limited to a maximum of 12 weeks payment. However it is paid only after end of the notice period and is reduced by the amounts of benefit claimed or which could have been claimed through the Social Security Agency or any amount earned in new employment during the period.

Under the scheme all payments have a legal limit on a week's pay, currently £310.00. This limit is reviewed every year.

Sir Reg continued: “I would encourage anyone seeking further clarification on redundancy or insolvency payments to contact our helpline on 0800 585 811.”

Notes to Editors:

1. Further details can be found in the Department’s Employment Rights booklets ER3 and ER5 available on our website at www.delni.gov.uk/erbooklets
2. Media enquiries to Department for Employment and Learning Press Office on 028 9025 7872.
3. Out of office hours please contact the Duty Press Officer via pager number 07699 715 440 and your call will be returned.