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New Employee Priority Amount in Business Failure

Published 14 Feb 2013

Recently there has been an update to the maximum amount paid to employees in company liquidations or bankruptcies.

The maximum priority amount that applies to Employee creditors of companies in liquidations, has been increased from $18,700.00 to $20,340.00 per Employee.

The increase reflects the general percentage increase in the average weekly pay over the past three years. This amount is capped by Schedule 7 of the Companies Act 1993, and section 276 of the Insolvency Act 2006, and is updated every three years.

After making payments of first priority order, liquidators must then pay certain amounts to Employees. These preferential Employee entitlements include: holiday pay, compensation for redundancy, and wages or salary for the four month period prior to the commencement of the liquidation.