Saturday, 8 November 2014

Tuesday, 4 November 2014

Salary and benefit payments during business closure

Q: If a business is closing down and I am about to go on maternity leave do they still have to pay me as well as I have two weeks’ vacation pending do they have to pay me for that as well?


A: You have to receive your salary/wages as long as they can afford it. This all depends on how the business is closing down and then the priority of debt payments. There are a few terms involved in this process; i.e. insolvency (compulsory or voluntary), receivership, liquidation, bankruptcy and administration. So it depends on the category which the company falls under when closing down.

Winding-up
Salaries have secondary priority to the government debts (taxes, NIS, etc.). According to the Companies Act 1995, as amended-s.435(1)(b):
all wages or salary (whether or not earned wholly or in part by way of commission or for time or piece work) of any employee, not being a director, in respect of services rendered to the company during four months next before the relevant date;

Bankruptcy & Insolvency
If the company is bankrupt, wages have 4th place priority according to The Bankruptcy and Insolvency Act, 2006 - s.127(d):
excluding severance, claims for wages, salaries, commissions or compensation of any employee for services rendered during the six months immediately preceding the bankruptcy, together with disbursements properly incurred by a traveling salesman in and about the bankrupt’s business, during the same period, so as not to exceed such amount as may be prescribed by Order in each case;



The law is not explicit as to whether unused vacation and maternity leave are included in debt payments, but it's a unique matter that I would love to put to the test.