On this page you can find answers to frequently asked questions about redundancy as a result of your employer becoming insolvent as well as the redundancy claims process.
You will not be entitled to redundancy pay if the Redundancy Payments Service believes that your employment has been transferred to another business.
This occurs if:
- The "business" or "undertaking" has been transferred to another company and
- You were employed immediately either on the transfer or immediately before the transfer.
The rules around transfer of undertakings are complex. In some cases the rules will depend on the facts of your specific case. You can read more information about these rules here.
Your employment status may determine your eligibility for redundancy pay. Click here to check your status.
If you are an employee and you've been working for your current employer for 2 years or longer, you should be entitled to statutory redundancy pay.
Your entitlement to statutory redundancy pay is as follows:
- For each full year you were under 22: 0.5 week's pay
- For each full year you were 22 or older, but under 41: 1 week's pay
- For each full year you were 41 or older: 1.5 week's pay
The length of service is capped at 20 years and weekly pay is capped at £479. The maximum amount of statutory redundancy pay is £14,370. Redundancy pay (including any severance pay) under £30,000 will not be taxed.
If you have worked hours and have accrued unpaid wages, make a note of them. Your employer is unlikely to cover this cost. However you can claim for unpaid wages using the Redundancy Payments Service.
If you have built up holiday entitlement that you have not yet taken or been paid for, make a note of it. Your employer is unlikely to pay this. However you can claim holiday pay through the Redundancy Payments Service.
You are entitled to a notice period before your employment ends, in the same way that you would be required to give notice if you were leaving your post as an employee. In practice you will normally be told that you are no longer required to attend work, and you will receive a formal letter stating this within a few days. You can then claim for the notice period you were entitled to, if you don’t find work within that period.
Under your employment contract you may have a contractual right to a longer period of notice than the statutory one. If this is the case, you can claim the difference between the statutory right and the contractual right from your employer. This makes you what is known as an "unsecured creditor" of your employer. This means that if the Insolvency Practitioner pays a dividend to the unsecured creditors of, for example 10p per pound, you will receive 10p for every pound you are owed. If you believe that your right to contractual notice exceeds the statutory limits you should request a "proof of debt" from the Insolvency Practitioner, which you should complete and return to them. This also applies to any unpaid wages, holiday pay or redundancy pay which you were contractually entitled to above the Statutory Limits. Unfortunately, only about 5% of companies going into insolvency end up paying a dividend to creditors. The Redundancy Payment Service may claim some of your dividend. The rules on this are complex. If you have questions about this process, talk to the Insolvency Practitioner.