Section 14. Insolvency of employer
(1) Where an employer has entered into a contract with insurers in respect of any liability under this Act to an employee, then on the employer becoming insolvent, making a composition or scheme of arrangement with creditors, or, if a company, on commencement of winding up, the employer’s rights against the insurers as respects that liability shall, notwithstanding any insolvency or winding-up law, be transferred to and vest in the employee. The insurers then have the same rights and remedies, and are subject to the same liabilities, as if they were the employer, but not any greater liability to the employee than they would have owed to the employer.
(2) If the insurers’ liability to the employee is less than the employer’s liability, the employee may prove for the balance in the insolvency or liquidation proceedings.
(3) Where the employer’s contract with insurers is void or voidable for non-compliance with contract terms (other than payment of premia), sub-section (1) applies as if the contract were not void or voidable, and the insurers may prove in the insolvency or liquidation for the amount paid to the employee: Provided this does not apply where the employee fails to give notice to the insurers of the accident and resulting disablement as soon as practicable after becoming aware of the insolvency or liquidation proceedings.
(4) The amount due in respect of compensation liability accrued before the date of the insolvency order or the commencement of winding up is deemed included among debts payable in priority to all other debts under the relevant insolvency and companies legislation.
(5) Where the compensation is a half-monthly payment, the amount due for this purpose is taken to be the lump sum for which it could, if redeemable, be redeemed under section 7, and a Commissioner’s certificate as to that sum is conclusive proof.
(6) Sub-section (4) applies to any amount for which an insurer is entitled to prove under sub-section (3), but otherwise does not apply where the insolvent or company being wound up had entered into an insurance contract as in sub-section (1).
(7) This section does not apply where a company is wound up voluntarily merely for reconstruction or amalgamation with another company.
