Employee debts in an insolvent liquidation

Employees caught up in an insolvent liquidation can claim outstanding wages from the appointed insolvency practitioner. Some debts, including holiday pay and wages, are preferential, meaning that they must be paid before certain other debts. If there are not enough funds in the business to pay the full amounts owed to employees, they can claim basic minimum debts from the National Insurance Fund, for the following:

• redundancy pay;

• wages up to a maximum of eight weeks;

• holiday pay up to a maximum of six weeks; and

• statutory notice.

Weekly pay is subject to the statutory cap (£450 per week from 1 February 2013).

Claims are made to the Insolvency Service on Form RP1. More information can be found on the Insolvency Service website: www.insolvency.gov.uk