Your Rights if your Employer goes “bust”!

Site updated on February 17, 2020

If your Employer becomes insolvent, or goes into liquidation, for example, you may still be entitled to certain payments.

If your employer is ‘insolvent’ this means it can’t pay its debts. You have rights if this happens and can make a claim for some of the money you are owed.

The business might keep running if there’s a chance it can be rescued or sold. If this happens, you might be asked to continue working. This doesn’t affect your rights to redundancy pay if the business closes down later.

If the business is sold as a going concern your employment rights are protected, including any pay that’s owed to you. You may be protected under laws known as TUPE. This is a complicated area of law and it is recommended that you get professional advice on your situation.

If you are owed holiday pay, notice pay, unpaid wages or statutory redundancy pay for example, you can recover some of these. You are a preferential creditor, and your claim for wages takes preference over other types of creditor.

What you can claim.

The money comes from the government’s National Insurance Fund. It’s not guaranteed that you’ll get everything your employer owes to you but you can claim for:

  • redundancy
  • wages – up to 8 weeks’ worth
  • holiday pay – up to 6 weeks’ worth
  • statutory notice pay – 1 week after 1 month’s service, going up to 1 week per year of service (up to a maximum of 12 weeks)
  • unpaid pension contributions (your pensions administrator does this for you)
  • basic award for unfair dismissal

Your statutory notice period (the minimum legal notice period your employer has to give you) is:

  • a week’s notice if you’ve been employed for between a month and 2 years
  • 2 weeks’ notice plus an extra week for each year you’ve worked if you’ve been employed for 2 years (this goes up to a maximum of 12 weeks)

You can claim for statutory notice pay if:

  • you’ve worked your statutory notice period but not been paid by your employer
  • you were dismissed without notice
  • you don’t work your full notice
You can only claim up to a set amount a week for your wages.

If it does not look likely that your Employer has funds available to settle your outstanding claim, you should contact the Insolvency practitioner who will send you claim forms. If this doesn’t happen, you should write to them. If you’re not sure who they are, you can contact Companies House to find out, or give us a call.

Take advice quickly as you must claim within 6 months if using the Tribunal system for redundancy payments for example.

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