If a company files for bankruptcy, do they still have to pay their employees the annual leave they earned?

Question

Please provide your sources. Thanks in advance.

What if they decide not to file for bankruptcy, then would they be entitled to pay you?

Answer 1

A lot depends on the country you are writing from. I will assume USA. Also, the answer depends totally if the company is solvent at the priority level. If the company is reorganizing in a chapter 11, you have a much better chance of being paid than in a chapter 7 liquidation.

Annual leave or vacation pay may be a priority claim. Priority claims are those claims earned within 180 days of the filing of the bankruptcy, not to exceed $10,000 (plus indexing). So basically, this means you have a priority right to vacation accrued during the 6 months immediately prior to bankruptcy not to exceed $10,000 plus indexing for cost of living.

You will receive this amount if the debtor is solvent at the priority level - in other words, you will have to be paid this before unsecured creditors or lower priority creditors (such as tax authorities) receive anything.

Answer 2

A co files bankruptcy when they have a severe cash flow (( income vs outgo)and they might not be able to.

They can't spend a dime unless the bankruptcy court approves it. Sorry, buy you just might be out of luck.

I once did recieve vacation pay----after 3 years.

Answer 3

If it is a publically held company, there is a hierachy of who gets paid first out of what is left after liquidation; preferred stockholders are first... employee leave is a long way down the list...

Answer 4

I agree w/ Think Ab....employees receive what's left...we call it "crumbs" where I'm from!