This briefing describes the options available to employees when owed money by an insolvent employer or one who refuses to pay statutory redundancy pay.Jump to full report >>
The Employment Rights Act 1996 and Insolvency Act 1986 provide a number of avenues via which an employee might seek payment of debts owed to him or her by an insolvent employer. The avenues fall into two broad categories.
First, the Secretary of State pays certain debts owed to employees via the Redundancy Payments Service. Aside from in the case of unpaid redundancy pay, the Redundancy Payments Service will only pay these debts if the employer has become formally insolvent.
Second, employees may seek payment from the company’s assets through insolvency proceedings or via administrators.
The options open to the employee may be summarised as follows:
This briefing provides further details about each of these. The law it discusses applies to the whole UK.
Commons Briefing papers SN00651
Authors: Lorraine Conway; Douglas Pyper