Your rights if your employer is insolvent
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.
Compensation because you were dismissed unfairly
You can make a claim to the employment tribunal if:
- you were dismissed unfairly (‘basic award’)
- there was not a consultation about your redundancy (‘protective award’)
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.