If your employer goes into insolvency, there are many choices available to you. Learn about insolvency and what to do if you’re due money from an employer that is insolvent and how it impacts your job status.

What is the definition of insolvency?

Insolvency occurs when the company is insolvent and has no funds to pay the debtors they owe in full , and they are forced to make arrangements to pay the obligations.

The types of insolvency

There are many names for various types of insolvency, as well as those who manage them.

In the event that your company is business or limited liability partnership the word “insolvency” refers to any of these:

  • Administration
  • liquidation
  • receivership
  • A voluntary arrangement with creditors

When your employee is an individual the word “insolvency” refers to some of the following.

It’s not considered insolvency situation if your company ceases trading, without any of the above events or a business is removed from the list of companies (dissolved).

The transfer of an insolvent firm

If your employer can’t make payments to you, they could insist that you continue working for them as they attempt to sell the company. If you are working on while your employer’s company is transferred, your rights as an employee are protected, which includes the payment due to you.


It’s possible that your employer isn’t officially insolvent, however they’re unable to pay you. In this scenario it could be that they are required to lay you off or assign you a shorter duration.

Being administrators, receivers,, or liquidator

Sometimes, a company may continue running in the event of an opportunity that the entire or a portion of the company’s assets could be improved or transferred to an owner who is new. If this occurs it could be necessary for you to work. This will any affect your rights to redundancy benefits when the firm shuts down in the future.

Insolvency practitioners

In most cases, an insolvency practitioner’ or an ‘Official Receiver’ is designated to manage the insolvency. They will be the primary person in charge of the matter and can be an official receiver or one of them:

  • Administrator
  • liquidator
  • Receiver
  • supervisor (of an agreement on a voluntary basis)
  • Trustee (in bankruptcy)

What are the rights you have to claim

You may claim all unpaid wages from an insolvency professional. It is not guaranteed that total amount you owe will be paid since it depends on the amount of funds are raised through the sale of the assets of your employer.

Certain debts, like wages and holiday pay, are considered to be preferential debt when the assets of your employer are divided. This means that they have to be paid prior to other debts.

Since full payment is not secured, there are specific agreements for employees to claim the minimum minimal amount due to them by the National Insurance Fund. The claims include:

  • redundancy
  • pay – up to a max of 8 weeks
  • holiday pay – up 6 weeks maximum
  • compensation notice pay compensation notice pay – one week following one calendar month’s service , increasing to one week per year up to 12 weeks maximum (new earnings are taken into consideration)

There is an upper limit of PS594 per week for the amount that you can claim as weekly pay.

What next?

If the company you work for has been shut down and you are looking to determine whether the company is insolvent or struggling. Companies House holds trade details in its company register, and you can find details on those who have been declared bankrupt through the Insolvency Service..

How can I get help?

The Labour Relations Agency (LRA) and Advice Northern Ireland provide free, confidential and independent assistance regarding all issues related to employment rights for all residents of Northern Ireland.

If you believe your business is insolvent legally If your employer is legally insolvent, you should get in touch with to the Insolvency Service and/or the designated insolvency practitioner.

If you have any questions regarding an application in progress for payments within the Statutory Redundancy Scheme, you may contact Redundancy Payments Service. Reliable Payments Services.

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