Inflation increase for employee payments during insolvency
The maximum priority claim amount payable to employees during insolvencies is to increase from $18,700 to $20,340.
The new priority claim amount reflects an 8.74 percent increase in average weekly earnings in the private sector over the last three years. The maximum priority claim amount is required to be adjusted every three years in line with inflation.
Under the Companies Act and Insolvency Act, employees have statutory preference as a creditor. This means wages and salary (including holiday pay and any compensation for redundancy) are paid up to a maximum priority claim amount before payments are made to unsecured creditors of the insolvent company or the bankrupt debtor.
The increase is in line with inflation and will have minimal impact on business.