Rights of employees in the event of insolvency – Insolvency/bankruptcy
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When a company begins formal insolvency proceedings, employees are understandably concerned about their job security and the company’s ability to pay their wages.
However, it is important to note that not all formal insolvency proceedings will automatically result in the termination of employee contracts. In addition, certain protections are afforded to employees in formal insolvency proceedings, in particular they are treated as preferred creditors when allocating the assets of the insolvent business as compensation (i.e. that there is a greater chance that their remuneration will be paid) and it is the National Insurance Fund to provide some degree of financial protection to employees affected by an insolvent employee.
If your employer is subject to insolvency proceedings or if you are concerned that your employer may become insolvent, you should seek legal advice. Edward Beedham specializes in the legal and procedural aspects of corporate insolvency, including advising employees on their rights in the event of insolvency.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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