Your rights if your employer is insolvent

Your employer is insolvent if they cannot pay their debts.  There are different types of insolvency including:

• administration

• liquidation

• bankruptcy

• receivership

• company voluntary arrangement

• individual voluntary arrangement

• debt relief order

If you employer becomes insolvent, you may be asked to keep on working, transfer to a new employer or you may be made redundant.

When an employee is made redundant following their employer becoming insolvent, they sometimes can be unsure as to what they should do and what payments they can claim for. 

If you have been made redundant, depending on your situation, you can apply to the government for:

• a redundancy payment

• holiday pay

• outstanding payments like unpaid wages, overtime and commission

• statutory notice pay

The Redundancy Payments Service  RPS makes payments from the National Insurance Fund, on behalf of the Secretary of State, to employees who have been made redundant and whose employers are unable to pay the statutory and contractual debts owed to the employees.

To make an application to the RPS, you must complete the RP1 form.  Normally the Insolvency Practitioner who is dealing with your employer’s insolvency will help you with that form. 

In addition, you can make a claim to the employment tribunal if you have been unfairly dismissed and/or there was no consultation carried out with you.  If your claim is successful, you can then apply to the National Insurance Fund for payment of any monies awarded, who may then pay you a proportion or all of those monies. 

If you have been made redundant following your employer’s insolvency and you feel you have been unfairly dismissed or were not properly consulted with in respect of your redundancy, please contact our employment law department at our office.