Law change means employees more likely to get money owed

Employees are more likely to get money they are owed when their employers go belly up under changes to insolvency laws.

Currently there is a $6000 cap on payouts of money owed to workers when an employer becomes insolvent.

There is also no priority of payment for any redundancy money owed to employees.

If a worker is owed $2000 in wages and $20,000 in redundancy, at present the employee is a preferred creditor for only the $2000 in wages and is regarded as an unsecured creditor for the balance.

Associate Commerce Minister Laila Harre announced today the cap would be lifted to $15,000.

That would now take in any entitlement to redundancy payments, as well as the current allowance for unpaid wages, salary and holiday pay for the four-month period before liquidation.

- NZPA