If an employer is unable to pay their debts, a person or a company, it means they are insolvent. Check the legal rights of employees upon employer insolvency and how to claim any money owed.
TYPES OF INSOLVENCY: Workers have rights any time their employer is insolvent. The law allows them to make a claim for monies owed to them. There are several different types of company insolvency:
There are two types of insolvency if your employer is an individual person (not a company):
Note: An 'insolvency practitioner' is a person who deals with an insolvent employer. The rights of employees upon insolvency allow them to claim through an insolvency practitioner for money owed to them.
In some cases, the administrator may try to keep the business running. They will search for any opportunities to rescue the company or try to sell it. In these circumstances, they may ask the employees to keep working during this period.
This situation does not affect employee rights to redundancy pay if the business later closes down. What if the business gets sold to someone else?
The government and insolvency practitioner help employees claim back money owed to them. They try to recover all outstanding pay from an insolvent employer.
There are several reasons why they cannot guarantee to get the full amount owing. But, as a rule you can claim for:
Note: Each claim has an upper limit of £479 per week. Thus, you could get both payments if your claim is for loss of notice 'and' redundancy money.
There are several ways to qualify for statutory notice pay such as:
The government deduct any other earned income during the notice period. They take it off the final notice pay. Examples of other income might include:
Note: Employee rights under insolvency do not allow a claim for any notice greater than the statutory notice period.
Statutory notice period gets defined as the 'minimum legal notice period an employer has to give an employee'. As a rule it will be:
All employees have some redundancy rights. Being made redundant means they can claim statutory redundancy pay if:
There are different processes for claiming payments but you can claim online for:
In cases where the claimant is sick or becoming a parent HM Revenue and Customs will pay:
The rights of employees upon insolvency of the employer can get complicated. You may have some trouble getting payments from an insolvent employer. If this happens, employees can contact the Statutory Payment Disputes Team.
Statutory Payment Disputes Team
Telephone: 03000 560 630
Check the cost of call charges.
Insolvency Enquiry Line
Telephone: 0300 678 0015
Redundancy Payments Enquiry Line
Telephone: 0330 331 0020
Monday to Friday: 9am to 5pm
Note: You can also contact Acas 'Advisory, Conciliation and Arbitration Service'. They offer expert help and advice for people dealing with redundancy issues.
Employee Rights if Employer is Insolvent in the United Kingdom