Thebusiness

NEIL FRASER

At a time when mass redundancy due to the financial failure of employers is a constant subject of debate in the news, it is worth reviewing an oftenoverlooked right of employees: their entitlement to protective awards.

It’s important to know what someone can expect to be paid if they lose their job because their employer becomes insolvent.

• Unpaid wages. to eight weeks

• Between one and 12 weeks’ pay, if they were given no notice

• Any holiday entitlement

• The normal statutory redundancy payment

It is important to This note is limited that all of these claims are subject to a cap on a week’s pay which is currently £489 per week, but is going up to £508 from 6th April 2018..

So what is a protective award? When a collective redundancy (involving 20 or more employees) happens, employers are under a statutory duty to collectively inform and consult with the representatives of affected employees before they start the process. This rule has strict time limits. If those time limits are broken then the employees can be entitled to up to 90 days’ pay, called a “protective award”.

The good news is that this protective award is classified as “arrears of pay”.

The bad news is that the eight-week limit on arrears of pay still applies, so even if a 90-day award is made, the NIF will only pay out a maximum of 56 days (eight weeks of seven days). Also, any other arrears of pay (but not notice pay, holiday pay or redundancy pay) count towards the eight-week limit. Finally, the weekly limit still applies, meaning the maximum the NIF can pay out for a protective award is currently £3,912, but will be £4,064 from 6th April.

As with all the other payments, any part of the protective award which is not covered by the NIF can technically be claimed from the insolvent employer, which might not be able to pay.

There is one last downside, which is that an employment tribunal must order that an employee is entitled to the protective award before the NIF will make any payment. The tribunal will take into account a lot of factors, including why the redundancies happened so quickly, whether there was any warning or any attempt to consult the employees’ representatives, and whether the employer had any choice in the matter at all. .

While company administrators or liquidators will usually tell employees all about claiming pay, notice, redundancy and holidays from the NIF, they rarely inform employees about the right to claim a protective award.

Alan Brown says he loves going to work