2 Mins
Written by: Shona Campbell
Partner & Head of Business Recovery and Insolvency
Last reviewed: 24 September 2026Losing your job is difficult under any circumstances. Discovering that your employer has suddenly ceased trading because it has entered liquidation, administration, bankruptcy or another insolvency process can make the situation even more uncertain.
For many employees, the immediate concern is practical: Will I be paid? What happens to my wages, holiday pay and redundancy entitlement? How do I claim money that is owed to me?
The good news is that employees have certain protections when an employer becomes insolvent. In many cases, the UK Government’s Redundancy Payments Service, part of the Insolvency Service, can pay eligible claims for specific employment-related debts.
Understanding what you can claim, what you cannot claim and how the process works can help reduce uncertainty and ensure you receive the payments you are entitled to.
What Can I Claim If My Employer Goes Bust?
If your employer goes bust, you may be able to claim unpaid wages, accrued holiday pay, statutory notice pay and statutory redundancy pay from the Government through the Insolvency Service. Claims are made online using a reference number provided by the insolvency practitioner handling the case.
What Happens When Your Employer Becomes Insolvent?
When a business enters liquidation, administration or another formal insolvency process, it may no longer have sufficient funds to pay employees amounts that are owed.
In some situations, the business or parts of it may be sold to a new owner, allowing employees to transfer to the purchaser and continue working. In others, employees may be made redundant because the business has ceased trading.
Where employees lose their jobs as a result of insolvency, the Government provides a safety net through the Insolvency Service, helping eligible individuals recover some of the money owed to them.
The insolvency practitioner appointed to the business, such as a liquidator, administrator or trustee, will provide information about the next steps and explain how to make a claim.
What Can Employees Claim?
Eligible employees may be able to claim the following:
- Unpaid wages
- Holiday pay
- Statutory notice pay
- Statutory redundancy pay
Each category has different rules and eligibility requirements.
Unpaid Wages
Unpaid wages are sums that should have been paid for work already completed.
This may include:
- Basic pay
- Overtime
- Commission
- Certain bonus payments
If your employer has become insolvent before your scheduled payday, you may be able to claim these unpaid amounts through the Insolvency Service, subject to statutory limits.
Holiday Pay
Employees can claim for accrued but untaken statutory holiday entitlement.
Holiday pay claims are generally limited to a maximum of six weeks’ entitlement.
This can provide valuable financial support for employees who have built up annual leave prior to the insolvency event.
Statutory Notice Pay
Employees are usually entitled to receive notice before their employment ends.
Where an insolvent employer cannot pay notice, eligible employees may be able to claim statutory notice pay from the Government.
Statutory notice periods are:
| Length of Service | Statutory Notice Entitlement |
|---|---|
| One month to less than two years | One week’s notice |
| Two to twelve years | One week for each complete year of service |
| Twelve years or more | Twelve weeks’ notice |
It is important to note that claims are based on statutory notice rights rather than any enhanced contractual notice period.
Because notice entitlement is linked to length of service, employees working for the same employer may receive different notice payments.
Statutory Redundancy Pay
Employees who have worked continuously for their employer for at least two years may qualify for statutory redundancy pay.
Entitlement is calculated using age and length of service:
- Half a week’s pay for each full year worked while under age 22
- One week’s pay for each full year worked between ages 22 and 40
- One and a half weeks’ pay for each full year worked aged 41 or over
For redundancy calculations, service is generally capped at 20 years.
What Can’t Employees Claim?
While the Government scheme provides significant protection, it does not cover every type of debt owed by an insolvent employer.
Payments Above the Statutory Cap
For employees made redundant after 6 April 2026, the maximum weekly amount used when calculating statutory payments is £751.
Employees earning less than this amount may receive their full entitlement. Employees earning more than the cap may only receive payments based on the statutory limit.
Any balance above the statutory cap becomes a claim within the insolvency process and must be submitted to the liquidator, administrator or trustee.
Unpaid Expenses
Business expenses are not covered by the Government scheme.
Examples include:
- Travel expenses
- Mileage claims
- Accommodation costs
- Other reimbursable work-related expenses
These claims must be lodged in the insolvency process as creditor claims.
Self-Employed Contractors
The Government protections available to employees generally do not extend to subcontractors or genuinely self-employed individuals.
If you worked as an independent contractor rather than an employee, you may need to submit a claim directly within the insolvency proceedings.
How Do You Make a Claim?
The claims process is managed online through the Insolvency Service.
Before a claim can be submitted, the insolvency practitioner handling the employer’s affairs must provide a reference number known as a “CN” reference.
Without this reference number, a claim cannot proceed.
Step 1: Submit Your Main Claim
The first application covers:
- Unpaid wages
- Holiday pay
- Bonus payments
- Commission
- Statutory redundancy pay
The application is completed online and requires personal information, employment details and bank account information.
Step 2: Claim for Notice Pay
Notice pay is claimed separately.
Employees cannot apply immediately after redundancy. Instead, they must wait until their statutory notice period has ended.
Once eligible, employees receive a second reference number, known as an “LN” reference, which allows them to submit their statutory notice pay claim.
Why Is Notice Pay Treated Differently?
Notice pay is designed to compensate employees for loss of income during the notice period.
The Insolvency Service therefore takes into account income received during this period, including:
- New employment earnings
- Certain state benefits
- Other qualifying income
Employees are expected to take reasonable steps to reduce their financial loss by seeking alternative employment and claiming benefits they are entitled to receive.
This means that notice pay calculations may differ significantly between employees, even where they worked for the same employer.
When Will You Receive Payment?
The Insolvency Service aims to process the vast majority of claims within six weeks of receiving the necessary information and completed applications.
Payment is normally made directly into the bank account provided during the online application process.
Timescales can vary depending on the complexity of the case and whether further information is required, but employees are typically kept informed throughout the process.
Practical Recommendations for Employees
If your employer enters an insolvency process:
- Keep copies of payslips, employment contracts and correspondence.
- Confirm the insolvency practitioner’s contact details.
- Obtain your CN reference number as soon as it becomes available.
- Submit claims promptly and accurately.
- Check your eligibility for state benefits if your employment has ended.
- Keep records of any new employment obtained during the notice period.
Taking these steps can help ensure claims are processed as smoothly as possible.
Understanding the Wider Insolvency Process
Employer insolvency does not always lead directly to liquidation. In some cases, businesses can be rescued through restructuring or recovery measures before jobs are lost.
Business recovery options may include refinancing, restructuring, Company Voluntary Arrangements (CVAs) or administration procedures designed to preserve viable operations and employment where possible. Businesses seeking support can learn more through Henderson Loggie’s Business Recovery & Insolvency service: https://hlca.co.uk/services/business-recovery-insolvency/.
For directors and business owners facing financial pressure, taking advice early can often increase the range of options available and improve outcomes for employees, creditors and other stakeholders. Businesses exploring restructuring solutions may also find it useful to understand Company Voluntary Arrangements (CVAs).
Conclusion
An employer’s insolvency can be a stressful and uncertain experience for employees. However, the UK insolvency framework provides important protections designed to help employees recover unpaid wages, holiday pay, notice pay and redundancy pay when a business can no longer meet its obligations.
Understanding what you can claim, how the process works and the timeframes involved can help you navigate the situation with greater confidence and ensure you receive the support available to you.
Employees with questions about a specific insolvency case should contact the appointed insolvency practitioner handling the matter, who will be able to explain the claims process and provide the information required to make an application.
Frequently Asked Questions
Yes. Employees may be able to claim certain payments from the Insolvency Service where an employer enters administration, liquidation or another qualifying insolvency procedure. Eligibility depends on the specific circumstances and the status of your employment.
In some cases, a business sale may allow employees to transfer to a new employer under employment protection rules. If employment continues under the new owner, redundancy payments may not be due. Each case should be assessed individually.
No. Most employee claims are submitted directly to the Insolvency Service through an online process. The appointed insolvency practitioner will provide guidance on how to access the claim system and obtain the required reference numbers.
Yes. Part-time employees generally have the same rights to claim qualifying employment-related payments as full-time employees, although entitlement will be calculated based on their own earnings, service and employment arrangements.
If you believe a payment has been calculated incorrectly, you should contact the Insolvency Service or the insolvency practitioner handling the case. Supporting documents such as payslips, employment contracts and payroll records can help resolve discrepancies.
