Updating authors: Julian Hoskins and Sarah Lamont

On this page:
Summary
Future developments
Practical example
Action point checklist
Key references
Questions and answers
Consequences of insolvency
Types of insolvency
Rights of employees to outstanding wages
Claims against the National Insurance Fund
Unpaid pension fund contributions

Summary

9.711

• Most, but not all, forms of insolvency will operate to terminate contracts of employment. Employees will be dismissed for reason of redundancy. (See 9.713 Consequences of insolvency)
• There are a number of different insolvency processes. They will each have slightly different employment implications. Expert advice must always be taken. (See 9.714 Types of insolvency)
• If an employer becomes bankrupt (individual or partnership) or goes into liquidation (company), employees will become preferential creditors to some extent in relation to any unpaid wages. (See 9.715 Rights of employees to outstanding wages)
• The Government operates a National Insurance Fund. This will meet the claims of employees who have not been paid outstanding wages by insolvent employers. (See 9.716 Claims against the National Insurance Fund)

Note: Chapter 3: Employee rights also includes a discussion of the consequences of insolvency (see 3.727 to 3.736 Insolvency of employer). 

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Future developments

9.712 There are no future developments.