SPM181200 - Paying and Recovering - SSP/SMP/SAP/SPP/ShPP/SPBP: Insolvent employer

HMRC are liable to pay any unpaid:

  • SSP from the date of insolvency
  • SMP, SAP, SPP, ShPP and SPBP from the pay week in which the liable employer becomes insolvent.

HMRC liability runs from the day or week in which insolvency occurs until entitlement ends. Remember that entitlement to SSP ends when the contract comes to an end, (which may have been ended at the insolvency date) or when incapacity ceases.

Payments due for periods before the day or week of insolvency remain the employer’s responsibility unless the employer defaults. If this happens, normal action should be taken to issue a decision, await a response or appeal and pay as appropriate, see SPM231800.

If after reviewing the case it is established that the employee does have an entitlement to a statutory payment but the employer is insolvent it must be established if the period of entitlement relates to a post or pre insolvency period, or both.

Post insolvency period

If it is established that the employee has entitlement to a statutory payment from an employer for a post insolvency period HMRC is liable to pay the employee their statutory payment.

If the statutory payment period has ended, a single payment can be made to cover the whole of the post insolvency period. If the statutory payment period continues, weekly payments will continue to be made until entitlement ends.

Pre insolvency period

If it has been established that the employee is entitled to statutory payments from an insolvent employer for a pre insolvency period, the employer is liable for any statutory payments due, up until the date the company became insolvent. Inform the employer that they are liable to make the statutory payment and issue a formal decision.

If it has been established that the employer, liquidator or official receiver will not make the payment further action is taken by the Statutory Payments Dispute Team.

A liquidator or official receiver may offer to pay some or all of the statutory payment at a later date when it has been established that there will be a distribution of company assets. However, it should be explained, that following the end of the 30-day appeal period, HMRC assume the employer’s liability when they default following the next payday. As the liability to pay the statutory payment then falls to HMRC, we would not expect to receive a payment from the liquidator or official receiver after that date.

However, should a payment be made by the liquidator or official receiver following the transfer of liability to HMRC, it should be accepted and paid into the NI Fund.

Reg 9A (1) (c) of the Statutory Sick Pay (General) Amendment Regulations SI 1987/894

Reg 7 of the Statutory Maternity Pay (General) Regulations SI 1986/1960

Reg 43 of Statutory Paternity Pay and Statutory Adoption Pay (General) Regulations SI 2002/2822

If the payment relates to a pre and post insolvency period, both processes should be carried out at the same time.