Employees when an employer is insolvent

Establish what has happened to the job

Keep the appointment notice, dismissal letter and any instructions about ongoing work. Confirm who employs you, when employment ends and whether a transfer is proposed. A company stopping trading or being struck off is not necessarily a qualifying formal insolvency for every government payment.

A director can also be an employee, but that status requires evidence of the real employment relationship. Contractors, agency workers and employees have different legal positions. Preserve the contract, payslips, payroll records and evidence of working arrangements.

Separate the amounts and claim routes

Potential claims include unpaid wages, accrued holiday, statutory redundancy and statutory notice pay. Government protection is subject to eligibility, qualifying dates, limits and deductions; it does not necessarily cover every contractual entitlement. The balance may remain a claim in the employer’s insolvency.

• List each pay period and amount rather than a single unexplained total.
• Keep holiday records and the notice or dismissal dates.
• Disclose relevant new earnings, benefits and payments already received.

Act on deadlines and check transfers

Payment applications and tribunal claims follow separate timetables. Read official instructions promptly; submitting one does not preserve every other right. Where a business is sold, transfer protections and responsibility for debts need specific analysis. Pension arrears should also be checked separately from net wages.

The position in Scotland

The Great Britain Insolvency Service payment route and Employment Rights Act 1996 also apply to Scottish employment, while the employer’s insolvency uses Scottish procedural rules. An employer’s Scottish location does not turn the employee payment application into a sequestration claim. Keep both government and insolvency claim records.