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 redundancy claims against insolvent employers in England and Wales. Explains statutory redundancy pay, wage and holiday claims through the Redundancy Payments Service, application steps, employment tribunal options, time limits and practical considerations for recovering money owed.
When an employer becomes insolvent - for example, enters liquidation or administration and cannot pay its debts - employees facing redundancy may be uncertain about their legal rights, how to recover statutory redundancy pay, and other monies owed. Insolvency affects the usual mechanisms for claiming pay and compensation. In England and Wales, specific procedures and government‑backed schemes help employees recover some entitlements, while legal processes such as employment tribunal claims remain available for certain disputes. This article explains how redundancy claims work when an employer is insolvent, what payments employees can seek, application procedures, time limits, tribunal processes, and common practical issues.
What Does Insolvency Mean in Redundancy Contexts?
An employer is considered insolvent where it cannot pay its debts as they fall due and enters a formal insolvency procedure such as liquidation, administration, or a voluntary arrangement overseen by an insolvency practitioner or official receiver. Employment rights law treats termination because of insolvency as a redundancy situation, meaning employees should be regarded as dismissed by reason of redundancy. Redundancy rights that normally apply still exist, but payment mechanisms differ because the employer cannot satisfy them through its own funds.
Statutory Payments Employees Can Claim
When a business is insolvent, employees and certain office holders may be able to claim specific statutory payments through the government's Redundancy Payments Service (RPS), part of the Insolvency Service. These payments are funded from the National Insurance Fund rather than from the employer's assets.
Statutory Redundancy Pay
Employees made redundant by an insolvent employer may be eligible for statutory redundancy pay if they were on the employer's payroll and had at least two years' continuous service. Redundancy pay is calculated using age, length of service, and a capped weekly pay rate.
Unpaid Wages and Arrears
Employees can claim up to 8 weeks' unpaid wages and other sums owed under their contract, such as commission or bonuses, up to the weekly pay cap.
Holiday Pay
Claims can include holiday pay owed but not taken or not paid for, subject to statutory limits (typically up to 6 weeks' holiday pay).
Statutory Notice Pay
Employees are entitled to statutory notice pay where they were not given the right notice period or were not paid for the notice they worked. This entitlement is also claimable through the RPS.
Protective Awards and Other Awards from Tribunal
When employees bring successful employment tribunal claims for procedural failures - such as lack of consultation about redundancy - the tribunal may make a protective award. The RPS may pay statutory elements corresponding to basic award and certain other statutory sums, but awards for injury to feelings, discrimination, or other non‑statutory compensation are not typically covered by the RPS and must be pursued separately.
How to Make a Redundancy Claim Against an Insolvent Employer
1. Obtain a CN Number
To begin a claim, employees need a case reference (CN) number from the insolvency practitioner or official receiver handling the insolvent employer's affairs. Without this number, claim forms cannot be submitted.
2. Complete Online Claims
Claims are usually made through the RPS online portal, often starting with the RP1 form for statutory redundancy pay, holiday pay, wage arrears and some other sums. A subsequent RP2 form is used for statutory notice pay.
Claimants must provide personal and employment details, such as National Insurance number, employment dates, gross pay rate and details of sums owed.
3. Processing and Verification
Once submitted, the RPS checks information against employer records. Processing times vary but can take several weeks. If information is incorrect or incomplete, claimants may be asked for further evidence or documentation.
Time Limits and Tribunal Claims
1. Time Limits for RPS Claims
Employees should generally apply for statutory redundancy and other payments within 6 months of dismissal. Holiday pay, notice pay and wage arrears claims follow similar practical deadlines, but these can vary based on individual circumstances.
2. Employment Tribunal Claims
If the RPS rejects a claim - for example, because it does not recognise the individual as an employee or disputes the amount - claimants may bring a claim to an employment tribunal. Time limits for tribunal claims are strict: usually three months less one day for claims relating to holiday or notice pay and six months for statutory redundancy pay claims unless otherwise specified. Before filing a tribunal claim, employees must notify the Advisory, Conciliation and Arbitration Service (ACAS) of their intention to pursue conciliation.
Employees typically list both their former employer and the Secretary of State (via the Insolvency Service) as respondents in tribunal claims relating to insolvency payment decisions.
Practical Issues and Risks
Delays and CN Number Availability
Insolvency practitioners may take time to issue CN numbers and provide necessary employer records, leading to delays before claims can be submitted. In practice, employees sometimes face uncertainty while waiting for formal insolvency dates and case numbers.
Evidence and Documentation
Employees should retain employment contracts, pay records, P45 forms, records of holiday entitlements and correspondence about redundancy. These can support both RPS claims and tribunal challenges if disputes arise over entitlements or employment status.
Claims for Non‑Statutory Awards
The RPS typically pays only statutory entitlements. If protections such as fair redundancy procedures were breached, or if there is discrimination or injury to feelings, employees may need to take employment tribunal claims for the additional compensation not covered by the RPS.
Common Questions
Can I claim redundancy pay if my employer goes insolvent but I have less than two years' service?
If an employer is insolvent, claimants may still be able to claim holiday pay, wage arrears and statutory notice pay even with less than two years' service, but statutory redundancy pay normally requires at least two years' continuous service.
What if my employer pays me nothing and then goes insolvent?
You can claim statutory redundancy pay, unpaid wages, holiday and notice pay from the RPS if the employer is insolvent. If you believe the employer was not genuinely insolvent, you could consider a tribunal claim, subject to time limits.
Can I bring a tribunal claim against an insolvent employer?
Yes. If your RPS claim is rejected or if there are issues such as lack of consultation or discrimination, you can pursue a claim to an employment tribunal, typically naming the Insolvency Service and former employer as respondents.
Are non‑statutory awards payable by government schemes?
No. The RPS does not pay awards for injuries to feelings, discrimination or other non‑statutory elements; these must be pursued through tribunal actions.
Key Takeaways
When an employer becomes insolvent in England and Wales, employees dismissed by reason of redundancy have routes to recover statutory redundancy pay, unpaid wages, holiday pay and statutory notice pay through the government's Redundancy Payments Service funded from the National Insurance Fund. Claimants need a case reference (CN) number and must complete online applications, observing practical deadlines. Employment tribunal claims remain available for disputes and non‑statutory awards. Thorough documentation of employment history and timely action are essential to maximise recovery.
