Employment Protection (Consolidation) Act 1978

125 Transfer to Secretary of State of rights and remedies. E+W+S

(1) Where, in pursuance of section 122, the Secretary of State makes any payment to an employee in respect of any debt to which that section applies—

(a) any rights and remedies of the employee in respect of that debt (or, if the Secretary of State has paid only part of it, in respect of that part) shall, on the making of the payment, become rights and remedies of the Secretary of State; and

(b) any decision of an industrial tribunal requiring an employer to pay that debt to the employee shall have the effect that the debt or, as the case may be, that part of it which the Secretary of State has paid, is to be paid to the Secretary of State.

[F1 (2) Where a debt or any part of a debt in respect of which the Secretary of State has made a payment in pursuance of section 122 constitutes—

(a) a preferential debt within the meaning of the Insolvency Act 1986 for the purposes of any provision of that Act (including any such provision as applied by any order made under that Act) or any provision of the Companies Act 1985; or

(b) a preferred debt within the meaning of the Bankruptcy (Scotland) Act 1985 for the purposes of any provision of that Act (including any such provision as applied by section 11A of the Judicial Factors (Scotland) Act 1889),

then, without prejudice to the generality of subsection (1) above, there shall be included among the rights and remedies which become rights and remedies of the Secretary of State in accordance with that subsection any right arising under any such provision by reason of the status of the debt or that part of it as a preferential or preferred debt.

(2A) In computing for the purposes of any provision mentioned in subsection (2)(a) or (b) above the aggregate amount payable in priority to other creditors of the employer in respect of—

(a) any claim of the Secretary of State to be so paid by virtue of subsection (2) above; and

(b) any claim by the employee to be so paid made in his own right,

any claim falling within paragraph (a) above shall be treated as if it were a claim of the employee; but the Secretary of State shall be entitled, as against the employee, to be so paid in respect of any such claim of his (up to the full amount of the claim) before any payment is made to the employee in respect of any claim falling within paragraph (b) above.]

(3) Where in pursuance of section 123 the Secretary of State makes any payment into the resources of an occupational pension scheme [F2 or a personal pension scheme] in respect of any contributions to the scheme, any rights and remedies in respect of those contributions belonging to the persons competent to act in respect of the scheme shall, on the making of the payment, become rights and remedies of the Secretary of State.

[F3 (3A) Where the Secretary of State makes any such payment as is mentioned in subsection (3) above and the sum (or any part of the sum) falling to be paid by the employer on account of the contributions in respect of which the payment is made constitutes—

(a) a preferential debt within the meaning of the Insolvency Act 1986 for the purposes of any provision mentioned in subsection (2)(a) above; or

(b) a preferred debt within the meaning of the Bankruptcy (Scotland) Act 1985 for the purposes of any provision mentioned in subsection (2)(b) above,

then, without prejudice to the generality of subsection (3) above, there shall be included among the rights and remedies which become rights and remedies of the Secretary of State in accordance with that subsection any right arising under any such provision by reason of the status of that sum (or that part of it) as a preferential or preferred debt.

(3B) In computing for the purposes of any provision referred to in subsection (3A)(a) or (b) above the aggregate amount payable in priority to other creditors of the employer in respect of—

(a) any claim of the Secretary of State to be so paid by virtue of subsection (3A) above; and

(b) any claim by the persons competent to act in respect of the scheme,

any claim falling within paragraph (a) above shall be treated as if it were a claim of those persons; but the Secretary of State shall be entitled, as against those persons, to be so paid in respect of any such claim of his (up to the full amount of the claim) before any payment is made to them in respect of any claim falling within paragraph (b) above.]

(4) Any sum recovered by the Secretary of State in exercising any right or pursuing any remedy which is his by virtue of this section shall be paid into [F4 the National Insurance Fund].

Textual Amendments

F1 S. 125(2)(2A) substituted (with saving) for s. 125(2), by Employment Act 1989 (c. 38, SIF 43:1), ss. 19(1), 29(6), Sch. 9 paras. 4(1), 5

F2 Words inserted by Social Security Act 1986 (c. 50, SIF 113:1), s. 86(1), Sch. 10 Pt. I para. 31(1)(c)

F3 S. 125(3A)(3B) inserted by Employment Act 1989 (c. 38, SIF 43:1), ss. 19(2), 29(6), Sch. 9 paras. 4(1), 5

F4 Words substituted by Employment Act 1990 (c. 38, SIF 43:5), s. 16(1), Sch. 2 para. 1(4)