Insolvency

If the employer is insolvent and unable to pay compensation, the Department for Business, Innovation and Skills assumes responsibility, but only for some of the money due. The payment is made from the National Insurance Fund and covers:

• basic awards for unfair dismissal,

• statutory notice pay;

• arrears of pay (to a maximum of eight weeks);

• holiday pay (six weeks’ maximum).

All payments by the National Insurance Fund are capped at the statutory “week’s pay” (£464: 2014-15).

A payment out of the National Insurance Fund breaks continuity. Even if employees later transfer to a new employer, they will have lost their right to count previous service.

If the Secretary of State fails to make any payment, a tribunal claim should be initiated within three months.

For more advice, contact your union or consult the government insolvency service at: https://www.gov.uk/your-rights-if-your-employer-is-insolvent.