This guide is maintained as a current resource for July 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Comprehensive guide to claiming redundancy pay if an employer cannot pay in England and Wales, explaining how the Redundancy Payments Service works, eligibility, statutory caps, application steps, time limits and remedies through tribunal or creditor routes when statutory limits are reached.
Employees who are made redundant in England and Wales normally have a statutory right to redundancy pay, notice pay and other contractual entitlements. These rights arise from the Employment Rights Act 1996 and supporting statutory instruments. If an employer cannot pay what it owes, either because the business has become insolvent or is otherwise unable to meet its financial obligations, employees can access a government‑run claims process to recover statutory redundancy pay, unpaid wages, holiday pay and statutory notice pay. This article explains how the process works, including eligibility, application steps, time limits, caps, interaction with formal insolvency and tribunal rights for unresolved disputes. It is designed to be clear and accessible for solicitors, employers and members of the public alike.
What Happens When an Employer Cannot Pay?
When an employer is unable to pay redundancy compensation, wages, holiday pay or statutory notice pay, the employee should not simply assume these entitlements will be lost. In many situations, the Redundancy Payments Service (RPS) - part of the Insolvency Service - steps in to make statutory payments directly to employees if the employer is insolvent or genuinely unable to pay.
The RPS scheme exists to protect employees from financial loss when their employer ceases trading, enters formal insolvency proceedings (such as liquidation or administration), or otherwise cannot meet statutory obligations.
Who Can Claim Through the Redundancy Payments Service?
To claim statutory redundancy and related payments when an employer cannot pay:
- The claimant must have been an employee (not a contractor) of the business.
- The employer must be unable to pay the redundancy and related sums, typically because it has entered formal insolvency; for example, the employer is in administration, liquidation or similar.
- The employee must have been dismissed by reason of redundancy.
- Employees need a case reference (CN) number from the insolvency practitioner or official receiver to use the online claim system.
If someone is not eligible for the RPS route (for example, because their employer has not formally entered insolvency or they are a contractor), they can instead consider registering as a creditor in the insolvency or pursuing claims via an employment tribunal.
Payments You Can Claim
The RPS can pay several types of statutory amounts. These are subject to legally prescribed caps on weekly pay and overall entitlement.
1. Statutory Redundancy Pay
Employees with at least two years' continuous service may receive statutory redundancy pay. The amount is based on age, length of service and weekly pay, and capped at a maximum weekly rate (for redundancies on or after 6 April 2025, £719). Payments are limited to service up to 20 years.
2. Unpaid Wages and Contractual Money Owed
The RPS can make payment for unpaid wages, overtime, bonuses and other contractual entitlements, but only up to 8 weeks in total. The weekly amounts are subject to the statutory cap.
3. Holiday Pay
Employees can claim for holiday pay accrued but not taken and for holiday taken but not paid in the 12 months prior to redundancy. Payment is capped at 6 weeks' holiday pay and at the statutory weekly pay limit.
4. Statutory Notice Pay
If statutory notice was not given or was not paid, the RPS can pay statutory notice pay up to 12 weeks, based on one week's pay for each year of service (capped at the statutory weekly amount).
How to Make a Claim
1. Obtain a Case Reference Number
If the employer is in formal insolvency, an insolvency practitioner or official receiver should issue employees a case reference (CN) number. This number is essential for applying online.
2. Apply Online
Employees claim by using the RPS online system, providing:
- National Insurance number, bank or building society details,
- Employment dates and pay details,
- Holiday entitlement and amounts owed,
- Copies of redundancy documentation and communication.
3. Claim Statutory Notice Separately
Statutory notice pay is claimed using a different reference number (an LN reference) issued after the redundancy process.
4. Time Limits
Claims for statutory redundancy pay must generally be submitted within six months of the date the employment ended. For statutory notice and other entitlements, similar timelines apply for each element. Employees should take care not to miss these statutory limits as they can bar claims.
Limits and Caps on Payments
The RPS pays statutory amounts only, and these are capped:
- Weekly pay used for calculation is capped (for redundancies from April 2025, £719 per week).
- Redundancy pay is limited to up to 20 years' service.
- Unpaid wages are capped at eight weeks' worth of pay.
- Holiday pay is limited to six weeks' entitlement.
- Statutory notice pay is limited to 12 weeks' pay.
If an employee is owed amounts beyond statutory caps or for types of loss the RPS cannot pay (for example, contractual redundancy, discrimination awards, injury compensation), they may register as a creditor in the insolvency or pursue those claims through an employment tribunal or civil court, dependent on context.
If the Employer Has Not Entered Formal Insolvency
If an employer is struggling but has not yet entered formal insolvency proceedings, the RPS route is generally not immediately available. Employees may consider:
- Writing to the employer formally demanding payment.
- Bringing an employment tribunal claim for unpaid redundancy or other statutory entitlements. This usually must be done within three months minus one day (for contractual entitlements) or six months minus one day (for statutory redundancy pay).
- If the employer subsequently enters insolvency, employees can then use the RPS process for redundancy pay and other statutory debts once they receive a case reference number.
Some employers in financial difficulty may also apply to the RPS for financial assistance to pay statutory redundancy to employees, provided they can document that they are genuinely unable to pay and have exhausted other funding options. This assistance covers statutory redundancy only, unless formal insolvency follows.
Interaction With Tribunal Rights
Even when the RPS pays statutory amounts, employees may retain rights to pursue other claims through an employment tribunal or court. For example:
- If an employer failed to consult about redundancy properly, a tribunal may award a protective award. Some of these can be paid via the RPS if they correspond to statutory elements.
- Employees can claim that they were unfairly dismissed if the redundancy was not genuine or the process unfair, typically naming both the former employer and the Secretary of State for Business and Trade as respondents in tribunal proceedings.
Tribunal claims have their own strict time limits and procedures, and successful claims can result in additional awards beyond statutory redundancy, though only certain elements are payable through the RPS.
Practical Steps for Employees
- Get your CN reference number from the insolvency practitioner as soon as possible.
- Apply online promptly for statutory redundancy, unpaid wages, holiday pay and notice.
- Keep records of employment dates, payslips and communications.
- If you are outside the RPS eligibility (for example, no formal insolvency), consider employment tribunal claims before statutory deadlines.
- Seek advice from Acas, Citizens Advice or legal advisers if disputes arise or the claim is complex.
Key Takeaways
When an employer in England and Wales cannot pay statutory redundancy or related entitlements due to insolvency or financial incapacity, employees can apply to the Redundancy Payments Service to recover statutory redundancy pay, unpaid wages, holiday pay and statutory notice pay. These entitlements are subject to statutory caps and time limits, and eligibility typically requires formal insolvency and a case reference number from an insolvency practitioner. Where statutory caps or eligibility criteria limit recovery, employees may pursue additional remedies as creditors or through employment tribunals for unpaid contractual rights or unfair dismissal. Prompt action, accurate documentation and awareness of statutory deadlines help protect employee rights when an employer cannot pay.
