Employment Rights Act 1996

189 Transfer to Secretary of State of rights and remedies

(1) Where, in pursuance of section 182, the Secretary of State makes a payment to an employee in respect of a debt to which this Part applies—

(a) on the making of the payment any rights and remedies of the employee in respect of the debt (or, if the Secretary of State has paid only part of it, in respect of that part) 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 has the effect that the debt (or the part of it which the Secretary of State has paid) is to be paid to the Secretary of State.

(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 182 constitutes—

(a) a preferential debt within the meaning of the [1986 c. 45.] 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 [1985 c. 6.] Companies Act 1985, or

(b) a preferred debt within the meaning of the [1985 c. 66.] Bankruptcy (Scotland) Act 1985 for the purposes of any provision of that Act (including any such provision as applied by section 11A of the [1889 c. 39.] Judicial Factors (Scotland) Act 1889),

the rights which become rights of the Secretary of State in accordance with subsection (1) include 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.

(3) In computing for the purposes of any provision mentioned in subsection (2)(a) or (b) 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 paid in priority to other creditors of the employer by virtue of subsection (2), and

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

any claim of the Secretary of State to be so paid by virtue of subsection (2) shall be treated as if it were a claim of the employee.

(4) 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 by the employee to be so paid made in his own right.

(5) 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 the National Insurance Fund.