If your employer is insolvent

Your employer is insolvent if it cannot pay its debts.

They might:

  • make you redundant
  • ask you to keep working
  • transfer you to a new employer (if the business has been sold)

There are different types of insolvency:

  • administration
  • liquidation
  • bankruptcy
  • receivership
  • company voluntary arrangement
  • individual voluntary arrangement
  • debt relief order

Check if your employer is insolvent.

Depending on your situation, you can apply to the government for:

  • a redundancy payment
  • holiday pay
  • outstanding payments like unpaid wages, overtime and commission
  • money you would have earned working your notice period (‘statutory notice pay’)

You may be eligible for unemployment benefits if you lose your job. If you do not apply for benefits after you lose your job, you might get less money in your statutory notice pay payment.

Your rights

You have different rights depending on whether your employer:

  • makes you redundant (dismisses you)
  • asks you to keep working
  • transfers you to a new employer (if the business has been sold)

Your employer must have a consultation about why redundancies are happening and if there are any alternatives – they do not have to consult you directly.

If you’re made redundant

You’re made redundant if you’re dismissed from your job.

The person who is dealing with the insolvency (the ‘insolvency practitioner’ or ‘official receiver’) must tell you how your job is affected and what to do next.

They’ll also give you a:

  • RP1 fact sheet
  • ‘CN’ (case reference) number to use when you apply for money you’re owed

You can apply to the government for:

  • a redundancy payment
  • holiday pay
  • outstanding payments like unpaid wages, overtime and commission
  • money you would have earned working your notice period (‘statutory notice pay’)

Businesses can go through more than one insolvency. You cannot claim outstanding payments between the day of the first insolvency and the day you were dismissed, even if you did not know about the previous insolvency.

You can also apply to the court for compensation if you think you were dismissed unfairly or not consulted properly.

You can make a claim to the employment tribunal if:

You’ll be claiming against the Secretary of State for Business and Trade and your former employer (‘the respondents’).

If you continue working after the insolvency

You might be asked to continue working for your employer after they become insolvent.

You’ll still be eligible to claim for redundancy pay and other money you’re owed if you’re made redundant at a later date.

You cannot claim holiday pay, wages, bonuses or commission that you’re owed between the day of the insolvency and the day you were dismissed.

If you’re transferred to a new employer

You cannot claim any money from the government if you were transferred before your former employer became insolvent.

If you were transferred afterwards, you can apply for redundancy pay, statutory notice pay and outstanding payments such holiday pay, wages, commission and bonuses.

What you may be able to claim

You’re normally entitled to redundancy pay if you:

You can apply for unpaid wages and other money you’re owed by your employer, for example bonuses, overtime and commission.

You’re only entitled to money that’s in your employment contract. You’ll get up to 8 weeks of money you’re owed. It counts as a week even if you’re only owed money for a few days.

You can get paid for:

  • holiday days owed that you did not take (‘holiday pay accrued’)
  • holiday days you took but were not paid for (‘holiday pay taken’)

You’re only paid for holidays you took or accrued in the 12 months before your employer became insolvent.

You’re entitled to a paid notice period when you’re made redundant, even if it is not in your contract.

You can claim for statutory notice pay if you:

  • did not work a notice period
  • worked some of your notice period
  • worked an unpaid notice period

Your statutory notice pay is worked out as one week’s notice for every year you were employed, up to a maximum of twelve weeks.

Unpaid Pension contributions, contact the insolvency practitioner or official receiver if you’re missing contributions to your pension.

Help completing the online forms

Contact the Redundancy Payments Service by telephone on 0330 331 0020 or by email if you have queries about completing the online forms. You’ll need your case reference number or National Insurance number.