Insolvency 


If the employer is insolvent, the Secretary of State for the Department for Business, Innovation and Skills (BIS) assumes responsibility via the National Insurance Fund, but only for part of the tribunal award. 


The National Insurance Fund will cover:


• the basic award;


• statutory notice pay;


• arrears of pay up to a maximum of eight weeks; and 


• holiday pay up to a maximum of six weeks.


A “week’s pay” is capped at a maximum of £479 (April 2016 – March 2017). 


Contractual lay-off pay is not paid by the Secretary of State (Benson v Secretary of State [2003] IRLR 748). 


A payment by the Secretary of State breaks continuity. This means that even if the employees later transfer to a new employer, they will have lost their right to include previous service for the purposes of any tribunal claim. 


If the Secretary of State fails to pay, a tribunal claim should be made within three months. Acas Early Conciliation applies (see Chapter 13). Any amount owed by the employer beyond the sums guaranteed by the Secretary of State must be claimed as a debt in the employer’s insolvency.


For more advice, consult the government Insolvency Service (see also Chapters 11 and 12).