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 any money you are owed.

Types of insolvency

If you work for a company that’s insolvent, this means one of the following:

• administration - where your employer asks an ‘administrator’ to come in to try to keep the company going
• liquidation - when a company is closed and its assets are sold to pay the people it owes money to (creditors)
• receivership - like liquidation but it’s usually arranged by a single creditor that’s lent money securely (eg a bank), and the assets are sold to pay just that creditor
• voluntary arrangement with creditors

If your employer’s an individual, insolvency is called either:

• bankruptcy (‘sequestration’ in Scotland)
• voluntary arrangement with creditors (‘deed of trust’ in Scotland)

The person who deals with the insolvency is called the 'insolvency practitioner'.

Your rights

If you’re owed money, you can claim for it through the insolvency practitioner.

If you’re asked to keep working

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 to someone else, your employment rights are protected, including any pay that’s owed to you.

The insolvency practitioner 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:

Companies House
Telephone: 0303 1234 500
Textphone: 029 2038 1245 ?
Find out about call charges

What you can get

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 £464 a week for your wages.

If you’re sick or becoming a parent

HM Revenue & Customs (HMRC) will pay you:

• Statutory Sick Pay
• Statutory Maternity Pay
• Statutory Paternity Pay
• Statutory Adoption Pay

If your employer's insolvent and you're having trouble getting these payments, call HMRC on 0191 225 5221 for help. Find out about call charges.

Redundancy

You can claim Statutory Redundancy Pay if you’re made redundant and if:

• you’ve been continuously employed for 2 or more years
• you apply in writing to your employer or an Employment Tribunal within 6 months of your job ending

You claim by filling out form RP1, which you can get by calling 0845 015 0010 and quoting URN 10/708. Find out about call charges.

The Insolvency Service has a redundancy payments factsheet to help you.

Download 'Redundancy payments factsheet' (PDF, 19KB)

For information about insolvency, call the Insolvency Service.

Insolvency Service
Telephone: 0845 602 9848
Find out about call charges

For information about redundancy payments, call the redundancy payments helpline.

Redundancy payments helpline
Telephone: 0330 331 0020
Find out about call charges

You can contact Acas (Advisory, Conciliation and Arbitration Service) for help and advice on dealing with redundancy.