As always it is only in a downturn that you actually find yourself looking through the Insolvency Act 1986. In my particular case the reason being was to double check what is counted as a preferred debt for employees. If you interested you will find all the information set out in Schedule 6 Category 5 Debts paragraphs 9 – 12. What is worth noting is that there is an upper limit for preferential employment debts of £ 800 (see Insolvency Proceedings (Monetary Limits) Order 1986/1996).
My instructing solicitor asked me, does this £ 800 include holiday pay? My initial reaction was of course however on closer reading of paragraph 10 it became clear that the limit found on paragraphs 9 & 12 was not to be found in paragraphs 10 & 11. This is somewhat puzzling as the books and guidance appear to take it as read that the limit applies to the totality of the employment debt.
In my particular case there was a sizeable sum outstanding in relation to holiday pay which incidentally does not appear to be defined or limited to a week’s pay or statutory entitlement as with claims to the Insolvency Service. It seems to me that the insolvency practitioner in this particular case is going to get a nasty surprise on Monday morning when he sees the size of the claim in respect of holiday pay. Mind you I do not think the administrator will take this lying down so expect a further chapter on this later this year.
You might also be interested to know a failure to pay a protective award made under TULRA S 188 & 189 can be a provable debt in an insolvency situation (see Haine & another v Day [2008] IRLR 642).
My instructing solicitor asked me, does this £ 800 include holiday pay? My initial reaction was of course however on closer reading of paragraph 10 it became clear that the limit found on paragraphs 9 & 12 was not to be found in paragraphs 10 & 11. This is somewhat puzzling as the books and guidance appear to take it as read that the limit applies to the totality of the employment debt.
In my particular case there was a sizeable sum outstanding in relation to holiday pay which incidentally does not appear to be defined or limited to a week’s pay or statutory entitlement as with claims to the Insolvency Service. It seems to me that the insolvency practitioner in this particular case is going to get a nasty surprise on Monday morning when he sees the size of the claim in respect of holiday pay. Mind you I do not think the administrator will take this lying down so expect a further chapter on this later this year.
You might also be interested to know a failure to pay a protective award made under TULRA S 188 & 189 can be a provable debt in an insolvency situation (see Haine & another v Day [2008] IRLR 642).
Peter D
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