Employee Rights When a Company Is Insolvent?

Within the United Kingdom, Employment rights when a company is insolvent is dealt with, when an employer commences an insolvency process, this then is an unsettling period for former employees.

When this happens, arrangements are in place to assist former employees when they are dismissed as a direct result of the insolvency of their employer. The UK National Insurance Fund ensures a basic minimum of payments to comprise redundancy and separate contractual payments owed, subject to limits and work to ensure approx 80% is paid out to former employees within four weeks of a submitted claim in conjunction with the appointed Insolvency Practitioner. This only protects employed people and not non-employed. (Contractors etc).

What Are The Rights And Entitlements Of Employees?

If any employee is owed money by the insolvent company, you should claim it through the insolvency practitioner, who is the independent professional who administers the insolvency. In some instances i.e., if a company rescue is being attempted or the business is being sold, you might be asked to continue working.

Your rights to any redundancy pay are not changed in any way if the company ceases to trade at a later time. In the event that the business is transferred to a third party, your rights as an employee are protected.

Help for Employees To Claim Monies Owed?

Once appointed, The licensed insolvency practitioner who is now known as the Liquidator will send you any claim forms you need provided the company may demonstrate you were employed on the PAYE scheme and had outstanding monies to you at the time of the liquidation.


Directors subject to paying PAYE and meeting criteria for conduct and not trading whilst insolvent may be able to claim, Redundancy Holiday Pay and Redundancy.

For further explanation read DIRECTORS REDUNDANCY.

For further help click on MEET THE TEAM

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