What you’re owed if your employer becomes insolvent

What you’re owed if your employer becomes insolvent

Your employer has gone into administration, or liquidation. Maybe they’ve just told you outright they can’t pay. Whatever you’re owed doesn’t just disappear. Some of it is guaranteed by the government, whatever state the company’s finances are in. Here’s what’s actually protected. Here’s what isn’t. And here’s how to claim it.

What the government actually guarantees

When an employer becomes insolvent, the National Insurance Fund steps in to guarantee a specific list of payments, whatever is left in the company’s accounts. As of the 2026/27 tax year, that covers:

• Statutory notice pay. One week’s payYour "week's pay" is the figure used to calculate statutory redundancy pay, notice pay, and some other statutory payments. For most employees it's your normal weekly pay before deductions, but it's ca... for each full year you worked there, capped at 12 weeks.
• Statutory redundancyA dismissal that occurs when your employer no longer needs the work you do, either because the business is closing, a workplace is closing, or the requirement for employees to carry out that kind of w... pay. The rate rises with age: half a week per year of service under 22, a full week per year from 22 up to 40, then one and a half weeks per year from 41 onward. Capped at 20 years’ service.
• Arrears of pay. Up to 8 weeks of unpaid wages.
• Holiday payThe pay you receive for the paid annual leave you're entitled to under UK law, worth at least 5.6 weeks a year for most workers. It's usually calculated from your normal pay, though the exact method d.... Up to 6 weeks of accrued but untaken holiday.

Every one of these is capped at a maximum weekly pay figure, £751 a week, in force since the cap rose on 6 April 2026. At that cap, the maximum redundancy pay anyone can receive is £22,530.

What isn’t guaranteed

The government’s guarantee has limits, and it’s worth knowing where they are before you rely on a figure that isn’t actually protected.

• Contractual notice above the statutory minimum. If your contract promised more notice than the law requires, only the statutory amount is guaranteed. The rest becomes a debt owed by the company, not a payment from the government.
• Discretionary bonuses. These aren’t covered at all.
• Other awards, such as compensation for discrimination or injury to feelingsA head of compensation in discrimination claims that recognises the distress and hurt caused by discriminatory treatment, separate from any financial loss. The amount is assessed using the Vento guide.... These have to be pursued against the company itself, not claimed from the Fund.
• Wages above £800. Unpaid wages from the four months before insolvency rank as a preferential debt only up to £800. Anything beyond that becomes an unsecured claim, which in practice often means little or nothing gets paid.

One recent tribunal case shows this in practice. An employee whose employer went into liquidation found that only the statutory minimum notice pay was guaranteed, even though his contract promised more. The lesson holds generally. What your contract promises isn’t always what’s guaranteed, and when the money runs out, only part of it is protected.

How to actually claim

You claim through the Redundancy Payments Service, part of the Insolvency Service, not from your employer directly.

You’ll need a case reference number, starting with “CN”, from the insolvency practitioner handling the company’s affairs. They should provide this automatically, but ask for it if you haven’t received it. Once you have it, claims for redundancy pay, arrears of pay, and holiday pay are made online.

Six weeks is the target once the Insolvency Service has what it needs from the insolvency practitionerAn insolvency practitioner is the licensed professional who takes charge of a company's affairs once it becomes insolvent, working out what's owed and to whom. If your employer goes under, they're usu.... In practice this can take longer, and payment by cheque in particular can be delayed, so treat that timeline as a target rather than a guarantee.

If your employer didn’t consult properly on redundancies

If a group of you were made redundant and your employer didn’t properly consult, there’s a separate claim worth knowing about: a protective award. This is different from redundancy pay and claimed on top of it, not instead of it.

The maximum protective awardCompensation an employment tribunal can order, up to 13 weeks' gross pay per employee, when an employer fails to properly inform or consult staff before a TUPE transfer. doubled to 180 days’ pay per affected employee for dismissals on or after 6 April 2026, up from 90 days previously. If the employer is insolvent and can’t pay a protective award a tribunal has ordered, the National Insurance Fund will still pay something, but the payment is capped at 8 weeks total, combined with any arrears of pay you’re also claiming, not 180 days in full.

This is a genuinely common problem. Several employers logged as insolvent in recent tribunal decisions were found to have skipped collective consultationCollective consultation is the legal process an employer must follow with employee representatives when proposing to make 20 or more people redundant at one establishment within 90 days. It is separat... altogether, leaving affected employees with a protective award claim on top of their ordinary redundancy pay.

Getting advice

You might not be sure what you’re actually owed, or a figure you’ve been given might not match what’s described here. It’s worth talking it through with someone who can look at your specific situation. We offer a fixed-price call where we can talk through where you stand and what your realistic options are.

The company running out of money doesn’t mean you’re left with nothing. It means you need to know exactly which parts of what you’re owed are actually protected, and claim them the right way.