What Happens To Employees When A Company Goes Into Liquidation?

Company liquidation Sydney is never a good road to take. Unfortunately, there may come a time when your business falls into liquidation. No-one wants to lose their business, but it happens, more often than you might know, and it’s a tragic ending to any company. However, liquidation doesn’t just have ramifications for business owners, but employees too. Do you know what happens to employees when a company goes under? Read on to find more in detail.

The Impact on Employees after Liquidation

Once liquidators are appointed, all employees on the company will be terminated. Employees are not technically fired but rather let go because the company cannot afford to pay their wages. What you have to remember is that business owners do not want to go bust. They will talk to a financial planner and do everything they can to keep the business afloat. Unfortunately, it doesn’t always happen. Even you might find yourself in this position. While you have to think about the impact on your employees, it can’t always be avoided.

What Happens To Outstanding Wages Or Payments To Employees?

Companies going into liquidation are more likely to have creditors to pay outstanding costs to and that can mean employees are pushed to the back of the queue. For example, any secured loan or creditor will have preference over an employee and will be paid first. However, employees will usually be paid before creditors that have unsecured monies owed. Company liquidation Sydney is unfortunate, but it happens. Employees are not only out of a job, but potentially have to wait to be paid what they’re owed. It’s a nightmare situation for all those involved and doesn’t get any easier either. On rare occasions, companies are able to scrape by and pay their employee’s wages before calling in the creditors. However, this won’t always happen.

Employees Can Make Further Financial Claims against Their Employers

It is very much possible for employees to launch claims against the company for a variety of things such as:

  • Unpaid Wages
  • For Their Notice Period
  • Holiday Pay
  • Redundancy Pay

However, these claims probably will not be settled quickly if there are many creditors to pay. Liquidators won’t prioritize these costs against creditors with secured lines of credit outstanding. That doesn’t mean to say your claim won’t be successful, but, it may take time to be settled entirely. Redundancy is usually suitable for employees who have been at the company for a considerable period of time and not a matter of months. Employees can contact a financial planner Sydney to help with future financial planning also.

Understand Your Position

Whether you’re an employer or employee, you need to know where you stand when it comes to liquidation. As unfortunate as it may seem, it can happen in any business. Sometimes, it’s known or is more public knowledge than others and that can soften the blow somewhat. Of course it’s never pleasant, but it’s something you have to prepared for and know where you stand. Company liquidation Sydney is tragic and that’s why you need to know what happens after. Continue reading here https://www.dailymail.co.uk/news/article-8078557/British-motoring-icon-reached-end-road-fascinating-history-Bristol-Cars.html